Strong Improvement in Results

Kuoni Group report

Kuoni’s business has recovered as the market has stabilised. As well as cost optimisations, the Group achieved a solid increase in net profit. There were two major negative influences on business during the year under review: the volcanic eruption in Iceland and the strength of the Swiss franc. The performance of individual markets varied – greatly in some cases – as economies recovered at different speeds. Kuoni Group turnover during the year came to CHF 3 984 million, representing a year-on-year increase of + 2.3 %. Organic growth development was + 3.6 %. Restructuring measures begun in 2009 led to a solid improvement in cost efficiency and a rise in earnings before interest and taxes (EBIT) to CHF 58.4 million (underlying EBIT: CHF 127.1 million). Net profit came to CHF 23.2 million (2009: CHF 1.6 million).

Positive economic performance helps recovery of tourist industry

Economic conditions during the year 2010 were characterised by a significant recovery from the major downturns seen in all regions in 2009. Many of the major economic regions recovered well. The EU consumer confidence index also recovered over the course of the year thanks to a broad-based increase in optimism about the general economic situation and a less acute fear of unemployment. The post-crisis scene is split between those countries and economic regions that have seen a weak economic recovery and those that have enjoyed a strong and swift return to positive growth. Uncertainty about the consequences of government debt caused a high level of volatility on currency markets. The Swiss franc reached new peaks especially against the euro and the US dollar.

According to the World Tourism Organisation (UNWTO), during the year under review the worldwide tourism industry recovered from the greatest collapse it has ever experienced. However, this revival was fuelled mainly by growth in the emerging markets of Asia and the Middle East, while the recovery in Europe in particular was weaker. This can be attributed mainly to the generally slower economic recovery on the one hand, and to the effects of the Icelandic volcano on the other. The ash cloud produced by Eyjafjallajökull affected hundreds of thousands of travellers when, for several days in April, almost all air traffic in Europe came to a standstill. Overall, 2010 was a year of stabilisation for the travel business in Europe, though performances varied greatly from country to country.

Kuoni increases turnover and gross profit

Kuoni recorded a clearly improved performance in 2010 and a marked recovery from the crisis of the previous year. This improvement was helped by a friendlier economic environment and a great improvement in cost efficiency. The economic downturn affected business to an unprecedented extent from the end of 2008 onwards, with all regions suffering simultaneously. The subsequent recovery has progressed well overall, but this time with substantial differences between individual regions. Leisure travel business in Asia recovered strongly; turnover in this region surpassed the figure posted in the record year of 2008. Leisure travel in Europe was overshadowed by the volcanic eruption in April. This hurt the industry in two ways: on the one hand people cancelled their travel bookings, and on the other tour operators had to pay the cost of repatriating travellers.

Uncertainties on the capital market also led to substantial currency fluctuations during the year under review. As a result, the Swiss franc, once again performing its function as a safe haven, appreciated further against many of the currencies that are significant for Kuoni. Owing to Kuoni’s highly international portfolio, this had a negative effect on its consolidated results for the period under review (CHF – 0.5 million).

Following the group’s strategic principles, numerous acquisitions in the premium and specialist segment were evaluated in 2010. Six smaller acquisitions were actually completed during the year. On 1 February 2010 the destination management business of TBA Global in the USA was purchased (KDM USA). On 1 September Kuoni acquired the golf specialist Krone Golf Tours ApS in Copenhagen, which was integrated into the Swedish organisation. Two companies were purchased in Dubai on 1 December: MICE specialist Golf Dunes LLC and the destination management company Reem Tours and Travel LLC. Also in December, Kuoni acquired the business of tour operating specialists Best Tours in Belgium and Italy. These two companies are independent of one another despite sharing the same name. The companies acquired during the year account for annual turnover of approximately CHF 140 million. The total purchase price for all these acquisitions was CHF 19 million.

Consolidated turnover for the year under review came to CHF 3 984 million. This represents an increase of + 2.3 % on the previous year. After excluding currency effects and the effect of acquisitions, like-for-like growth came to + 3.6 %. All divisions achieved higher turnover than in the previous year. However, this positive performance was driven mainly by strong growth in the destination management business and Kuoni’s units in Asia.

Group turnover of CHF 3984 million by activity and market