Thomas Cook shows first operating profit since 2010
02 Dec 2013
Thomas Cook has unveiled several new cost saving targets with the posting of its first annual operating profit for three years.
The tour giant made an operating profit of £13 million for the year to 30 September, its first since 2010 as against £170 million operating loss last year.
However, the 172-year-old tour operator continues to be in the red at a pre-tax level, once exceptional items were taken into account, although losses were lower at £158.1 million from the earlier £336.8 million.
Revenue was up 1.3 per cent to £9.3 billion even as the company pulled out of unprofitable products and businesses.
Thomas Cook, on the brink of collapse in 2011, is currently under extensive transformation initiated by chief executive Harriet Green, who joined in July 2012 in a bid to turn trhe company around.
The group has so far raised around £60 million through disposals and has thus far reduced its number of brands and businesses from 85 to 30.
Green had also undertaken a drive to cut costs through initiatives such as merging Thomas Cook's UK, German and Belgian airlines.
Its shares shot up nearly 15 per cent to 175.7 pence, meaning the stock rose nearly eight-fold in a year.
Green embarked on an aggressive cost cutting after she was recruited from electronics business Premier Farnell.
Her appointment came after she put in a cold call to the tour operator's chairman to tell him the company needed her.
Thomas Cook shot past the target of cutting costs to boost profit, reaching £194 million compared to its initial target of £145 million.
And Green continued upgrading forecasts for the next two years, saying her initiatives could take cumulative savings to £440 million by the end of 2015.
She said a second round of cost cutting could see the same result from 2015-2018, which could take the total improvement to £880 million.
The UK operations saw Green close down 227 High Street shops with 2,500 redundancies as a component of her turnaround plan (See: Thomas Cook to shut 200 travel agencies in the UK).
Yesterday, she added, however there were 'no further shop closures or redundancies to talk about' in the near future.
