Thomas Cook says has turned the corner

LONDON Wed Nov 28, 2012 11:23am GMT

A worker changes the window display of Thomas Cook in Loughborough, central England December 14, 2011. REUTERS/Darren Staples

A worker changes the window display of Thomas Cook in Loughborough, central England December 14, 2011.

Credit: Reuters/Darren Staples

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LONDON (Reuters) - British travel group Thomas Cook (TCG.L) said it had seen a strong finish to its fourth quarter as its recovery plan cranked into gear, after a year in which operating profit nearly halved.

Thomas Cook said on Wednesday winter bookings were ahead of committed capacity in all markets at improved prices.

The group has been hit hard by the economic downturn, high fuel costs and social unrest in popular destinations. It has had to renegotiate bank loans and make disposals to cut debt.

Underlying operating profit fell 49 percent to 156 million pounds in the year to September 30, in line with the forecast in a Reuters poll. Revenue fell 3.2 percent to 9.49 billion pounds, it said, adding: "Over 23 million customers enjoyed their holidays with us".

Restructuring costs saw its pretax loss widen 22 percent to 485 million pounds, with the 171-year-old group seeing profit fall in all its regions. as it carried 23 million passengers.

"These results reflect the major issues that Thomas Cook faced last year. They mask the material improvement that we made in the fourth quarter," said chief executive Harriet Green, who arrived in July to revive the group's fortunes.

"Thomas Cook, in my opinion, is not broken. It is viable and working, and we have turned the corner," she said. The company said Green had bought 500,000 shares at 23 pence.

Its shares were up 1.0 percent to 24.25 pence at 1120 GMT.

Net debt fell 103 million pounds to 788 million, compared with a forecast for little change. The company said it would fall at least another 50 million pounds in its 2012/13 year.

"Net debt was lower than we had expected, and this should give some confidence that the new management team can deliver," Peel Hunt analyst Nick Batram said.

"Nevertheless, while the upside from getting it right is significant, the task remains substantial."

Green, who has said technology will be the group's salvation with its online business set to be the key distribution channel, will unveil a full turnaround plan for the group in the spring.

On Wednesday, she said 100 million pounds of annualised savings had already been identified, in addition to 140 million pounds of British cost cuts already announced.

Thomas Cook said it was considering options for its French business whose market has been hit by domestic economic uncertainty and political unrest affecting popular French-speaking destinations such as Morocco and Tunisia.

(Editing by Dan Lalor)

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