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Kuoni insists sunnier times lie ahead

Kuoni is predicting an improvement in the fourth quarter Keystone Archive

Kuoni, Switzerland’s biggest travel group, continues to suffer from the slump in the global tourism industry, posting a 77 per cent drop in net profit for the first nine months.

This content was published on November 4, 2003 - 10:37

But the company said the worst was over, predicting an improvement in its fourth-quarter results and sticking to its full-year outlook.

"I think one can say that the downturn is over for tourism," said chief financial officer Max Kratz. "How fast and intensive [growth will come], we will have to see.

"Next year we will be on the growth path for sure, barring any unforeseen events like this year."

Third-quarter net profit fell to SFr49.4 million ($36.3 million), down 30 per cent on the corresponding period last year. Turnover between July and September also slipped, falling 12.3 per cent to SFr1.068 billion.

But Kuoni reiterated its forecast that 2003 sales would fall just over ten per cent and net income would roughly halve from last year’s SFr26 million.

“[The situation] is still difficult. What is positive, is that they haven’t taken back the [full-year] expectations, that they are still sticking to those,” said Zurich Cantonal Bank analyst Rolf Kunz.

Travel downturn

Like the rest of the travel industry, Kuoni has suffered in the wake of terrorist attacks, the weak global economy and war in Iraq.

But the group’s shares have risen around 60 per cent so far this year on hopes of a sector turnaround and on speculation that it might be a takeover target for the German travel group, Tui, or Britain’s Thomas Cook.

In its statement, Kuoni said demand was still weaker than last year in Switzerland, but “signs of a recovery are discernible”.

The results from Europe were even more positive, with turnover only slightly down on last year. France, Italy and Spain were the main contributors to this good performance.

The firm expects an improved fourth quarter, but says this would only partly offset the woes of the first nine months.

"For the fourth quarter, [sales] look good. We will come very close to the comparable year-ago figure," said Katz.

swissinfo with agencies

kuoni

Third-quarter net profit fell 30% to SFr49.4 million.
Turnover was down 12.3% to SFr1.068 billion.
Booking activity was "slow" over the same period.
Net profit after nine months amounted to SFr5.3 million - down 77%.

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