(Adds CEO, analyst comments, latest share price)
LONDON (AFX) - First Choice Holidays PLC grew full-year profit 13 pct, just
shy of expectations, as the UK's largest independent holiday company continues
to emerge from a prolonged industry downturn following the 9/11 attacks.
First Choice, which has cut the number of its short-haul holidays, said it
was encouraged by forward bookings for winter 2004/05 and summer 2005 following
"a difficult period" which also included wars in Afghanistan and Iraq.
Profit before tax, goodwill amortisation and exceptional items climbed to
98.3 mln in the year to October 31 from 87.1 mln the previous year on sales up
6.5 pct to 2.35 bln.
The tour operator had been expected to post profit of 99.4 mln stg according
to a consensus of 15 financial analysts' forecasts provided by the company
itself. Forecasts ranged from 95-105.5 mln.
"First Choice Holidays PLC has again delivered a strong performance... The
current financial year has started strongly with an encouraging forward booking
profile," chief executive Peter Long said in a statement.
He said the company was seeing no evidence of a slowdown in spending by UK
consumers following a series of interest rate increases.
"It's a tale of two stories in terms of the mood out there on the high
street... What we're seeing is that the holiday's a must-have," he told AFX
News.
First Choice shares rose 3 pence, or 2.1 pct, to 146.5 by 8.45 am, valuing
the business at around 772 mln stg.
Broker Panmure Gordon described the results as "positive" and increased its
2005 profit forecast by 2 mln stg.
Panmure advised clients to buy the shares and lifted its target price 15
pence to 175.
Long indicated he is comfortable with the current consensus of analysts'
forecasts for the company to further grow underlying profit to between 108-111
mln stg in 2005.
The mainstream holiday arm, which still accounts for around 50 pct of group
earnings grew operating profit 6 pct to 48.5 mln stg.
Sales fell 1 pct to 1.17 bln stg following a planned 4 pct cut in capacity.
First Choice said the unit's bookings were up 5 pct for winter 2004/05 and
up 20 pct for summer 2005.
The unit has been focusing on selling more medium and long-haul holidays as
fierce competition from low-cost airlines pressured margins on destinations such
as Spain and Portugal.
Long-haul bookings to the United States, Mexico and the Caribbean leapt 53
pct, aided by a weaker US dollar. The US unit last week fell to a 12-year low
against the pound.
The healthy booking numbers echoed recent remarks from rival European
holiday groups such as TUI AG, the German owner of Thomson Travel, and
crisis-torn UK operator MyTravel Group PLC.
Profit on specialist holidays to continental Europe and other countries such
as Egypt, Morocco and Canada, grew 23 pct to 24.6 mln stg on sales up 10 pct to
746 mln.
Bookings for winter 2004/05 were up 21 pct and up 34 for next summer.
The activity holiday unit meanwhile grew operating profit 27 pct to 15.1 mln
on sales up 6 pct to 196 mln.
First Choice declared a final dividend of 3.75 pence per share, with the
full-year payout rising 10 pct to 5.5 pence.
Diluted earnings per share rose 77 pct to 6.2 pence, while basic EPS rose 15
pct to 10.8 pence on an underlying basis.
rob.branch@afxnews.com
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