Thomas Cook shares rocket as losses narrow in first quarter - UPDATE

7th Feb 2013 08:49

UK travel company Thomas Cook Group on Thursday posted operating losses for the first quarter, but showed vast improvement over the past year. Shares soared 15.73% to 82.75p at 13:45 after the group reported an operating loss of £69.8m of the last three months of 2012, a 23% improvement on the £91.1m loss in the previous year. Overall loss before tax came to £127.9m, a 15% drop compared to the £151.7m reported for the same period a year ago.Total revenues fell 7.3% to £1.72bn during the period and gross profit was down 3.5% to £377m.However, the world's oldest travel firm said gross margin came to 21.9%, up 1.3 percentage points on the first quarter of 2011/2012.The group, which has run for the past 172 years, has experienced a tough last two years with a slump in sales leading to a string of profit warnings. It has been forced to renegotiate bank loans and make disposals to cut debt.Thomas Cook has started to see improvements since Harriet Green took over as Chief Executive Officer in May. A series of disposals to cut debt, including the sale of its Indian business and several Spanish hotels, have also helped recover business. The firm reduced debt by £86m to £1.56bn over the past year and expects to slash costs by a further £60m in 2013 - which may lead to a 29% increase in the company's earnings per share, comment analysts at Credit Suisse. The company said winter and summer bookings were "robust" and in line with expectations. A strategy of improved capacity management resulted in higher sales prices and better margins.It added a turnaround plan was on track to delivering sturdier results this year. "We have seen stronger operating performances in our major markets - the UK, Germany and the Nordics," said Group Chief Executive Harriet Green. "I am particularly pleased with the improved performance in the UK as the benefits of the turnaround plan are reflected in its operating results. "Our business transformation is firmly on track. We have further strengthened our leadership team and the pace at which we are driving change gives me confidence that together we will achieve our near term objectives and much more."In reaction to the above Credit Suisse lifted its estimate for fiscal year 2014 earnings before interest and tax estimate to £33m following what it described as a solid first quarter. It also raised its price target to 0.93p from 0.36p and retained its 'outperform' rating. RD