Kuoni loss turns out not as heavy as feared

The Asian tsunami alone cost Kuoni SFr20 million Keystone

Swiss travel group Kuoni has posted a net loss of Sfr42 million ($32.37 million) for 2005, weighed down by write-offs and costs related to natural disasters.

The result at Switzerland’s largest travel concern was better than analysts had hoped for, with sales exceeding market expectations.

The share price rose by seven per cent in early trading in Zurich on Thursday to SFr605 from SFr565.5 at Wednesday’s close but ended the day at SFr568, up 0.44 per cent.

The company said on Thursday that earnings before interest, tax and amortisation (Ebita) fell by over five per cent to SFr120.4 million last year, despite sales rising three per cent to SFr3.688 billion.

Analysts polled by Reuters had forecast only a two per cent rise in sales, with Ebita reaching SFr117 million and a net loss of SFr57 million.

Sales fell in Switzerland, Britain and North America, but were stable in much of Europe and on the rise in Scandinavia and Asia.

Tsunami

The tsunami in Asia shaved another SFr20 million off earnings, according to the group.

Kuoni ended up in the red after booking a SFr58.3-million loss on the sale of its United States-based unit Intrav as well as writing off SFr98.2 million on its investment in the Canary Islands resort, Las Playitas.

The company has been seeking a purchaser for the hotel complex but failed to raise any interest. To protect its own interests, Kuoni now plans to finish the project itself and sell it at a later date.

The group is also considering whether to take management members of its project partner, the Holiday Association, to court.

“In opting for this solution, we are drawing a line under an unfavourable episode in our past and we can now focus all our efforts and energies on the chances and challenges ahead,” said Kuoni CEO Armin Meier.

In its outlook, the company reckons that 2006 business prospects are very encouraging and it expects a current industry upturn to continue in the next few years.

Bookings up to March 12 were up 11 per cent over last year, underlining the positive trend in the tourism sector, it added.

swissinfo with agencies

In brief

Kuoni was founded in 1906 in Zurich, offering group tours up the nearby Üetliberg at a cost of SFr1.

Today, the group operates in 27 countries in Europe, Asia, Africa and North America with nearly 7,000 employees.

Kuoni is active mainly in leisure travel and destination management.

Key facts

Kuoni turnover in 2005: SFr3.688 billion.
Gross profit: SFr828 million.
Ebita: SFr120.4 million.
Net loss: SFr42 million.