Kuoni plunges into the red
Switzerland's largest travel group, Kuoni, went deep into the red last year but the company said on Wednesday it was confident it would improve results this year.
Kuoni, based in Zurich, reported a loss of SFr281.71 million ($169.6 million) for 2001, from a SFr115.1 million profit in 2000.
Sales remained stable at SFr4.065 billion, compared with 4.113 billion in 2000.
Kuoni said goodwill write-offs, made because of the terrorist attacks on September 11 in the United States, had reduced the balance sheet by SFr203 million.
Excess flight capacity
The results were also affected by a provision of SFr80.5 million for excess flight capacity offered by the group’s Scandinavian subsidiary, Apollo.
A statement said the provision should cover overcapacity losses up to the beginning of 2005’s summer season.
The company said that booking volumes for the first few weeks of 2002 suggested that customers were “rediscovering their desire to travel” in all key markets.
The restructuring of subsidiaries in the US, Scandinavia and Italy, which had depressed last year’s results, was now largely complete, it added. This involved the cutting of 500 jobs.
The company’s executive vice president for Switzerland and Scandinavia, Thomas Stirnimann, admitted at a news conference in Zurich that an investigation of Apollo had revealed “serious shortcomings”. However, he said that the problems had now been eliminated.
The probe was made after Kuoni had acquired all the remaining shares in Apollo at the beginning of the year.
“2001 saw our Scandinavian operations following three basic objectives: limiting the damage that could no longer be repaired, replacing personnel in key management positions and getting production for 2002 back on sounder tracks,” he said.
Difficult quarter
The company, which had already faced a disappointing first half, commented that 2001 had been an “exceptionally turbulent” year.
However, Kuoni’s Swiss unit and the British and North America business, almost managed to equal 2000 results with sales of SFr1.058 billion and SFr1.030 billion respectively.
Last week, investment bank UBS Warburg was positive about Kuoni, commenting that it expected improving booking levels to drive the share price in the near term.
UBS Warburg stocks specialist Christian Hefti told swissinfo that Wedsnesday’s result was not as bad as had been expected and it was recommending investors to buy the stock.
“It was not burdened with any out of the ordinary items as fas as we could and we were indeed quite happy with that,” he said.
He shared Kuoni’s confidence about being able to improve performance. “That will be driven by two things…the resumption of the booking levels and by the company taking a close look at the costs. A lot hinges on the Scandinavian business” he added.
The company faced a bitter power struggle within its ranks last year, which ended with its chairman, Daniel Affolter, leaving by “mutual agreement” in June.
Under the terms of an accord, Kuoni said it would pay Affolter salary payments of SFr2 million, pension fund benefits of SFr1.5 million and compensation for legal proceedings. Affolter had been demanding considerably more.
by Robert Brookes with agencies
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