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Last Updated : Aug 05, 2016 03:01 PM IST | Source: CNBC-TV18

Acquisitions to help Thomas Cook improve margins: COO

With the various acquisitions that they have done, the company is the single largest operator in the holiday space now, said Mahesh Iyer, COO, Thomas Cook.


Mahesh Iyer, COO, Thomas Cook said the first quarter is usually the strongest quarter for the holiday business.


The company reported a good set of earnings for the quarter ended June 30. The revenue was up 63 percent at Rs 2476 crore; margins too were up at 5.7 percent compared to 5.2 percent reported for the same quarter earlier fiscal. PAT was  up 56 percent at Rs 62 crore. However, the finance cost doubled at Rs 30 crore versus Rs 15.6 crore YoY.


Throwing more light on their Q1 numbers, Iyer said the travel business including SOTC Travel Services Pvt Ltd grew over 100 percent YoY and the travel services business registered a 20 percent YoY growth.

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With the various acquisitions that they have done, the company is the single largest operator in the holiday space now, which will help them improve their margins in the next three quarters.


The forex business too is doing well, said Iyer.


Since last year the company has acquired Luxe Asia in Sri Lanka, Kuoni Group’s travel operations in India and Hongkong. It also acquired Kuoni Travel (India) business for Rs 535 crore and its subsidiary Sterling Holidays bought Nature Trails, the adventure tourism company.

Below is the verbatim transcript of Mahesh Iyer’s interview to Reema Tendulkar & Nigel D'Souza on CNBC-TV18.

Nigel: Numbers looked good. Total income up by close to around 63 percent but could you give us a like to like comparison? You have a lot of acquisitions, you have done quite a few acquisitions in the last year or so, so how much did those acquisitions contribute to your topline and on a like to like basis what would be the growth?

A: I will break this conversation into three parts. If you look at the consolidated numbers for Thomas Cook, there are three sets of business in this. One is the travel vertical which comprises of the Thomas Cook and the SOTC brands that we acquired in Q3 of 2015. Second part consists of Sterling Holidays which is a vacation ownership business and the third one is Quess Corp.

If you look at the Thomas Cook business which is the travel services business on a like-to-like basis the business has registered over 20 percent growth over the last year. This is fuelled by growth across business verticals which is the travel side, the holiday business and as well as the foreign exchange.

If I look at the holiday’s business, it is important to reflect upon the fact that typically this quarter is the strongest because it coincides with the holiday season for travellers. It is also important to note that the backdrop of this performance is --  there are lot of uncertainties that we saw in the global markets and the terrorism related threats that we saw in major markets for us which is Brazil, France, largely the European markets. In light of that the kind of numbers that we have looked is strong more than 20 percent growth over the same quarter.

The only point, I want to reflect upon here is that this is not a like-to-like comparison when you look at the 100 percent growth because for the previous quarter we don’t have the SOTC numbers. As you will know that the acquisition was completed in Q3 of 2015, so it is not a like-to-like comparison. On a like to like basis it is over 20 percent growth.

Reema: If you could tell us what these acquisitions did to the company’s margins?

A: Three things, one if you look at from a portfolio point of view now we are the single largest operator in this space on the holiday space. Number two we got the advantages of value buying because now when we go and talk to our suppliers of services, we go as group and buy this. So, it has helped improve our margins by about close to 50 basis points and we expect the full blown benefit to come over the next three quarters.

Nigel: Q1 is seasonably the strongest quarter. Now Sterling Holidays has turned back into the black on a operating profit. You are expected to sustain over there or do you expect from the next few quarters we could see it again dip into the loss because it is not a very large part of your business but here it makes a difference on the margin front and also the foreign exchange (forex) business has turned around, that is giving you good margins as well a very small part of your business?

A: If you look at the foreign exchange business it is sizeably large number as far as the Thomas Cook business is concerned. It gets a little muted when you combine the two organisations which is SOTC and Thomas Cook because the travel portfolio becomes larger then. However, from a standalone foreign exchange point of view, it is still close to about 50 percent of our standalone numbers. That has grown this year this quarter at about 28 percent.

Coming back to the Sterling, if you look at the quarterly numbers they have registered about 77 percent occupancy rates and both vacation ownership as well as resort income has grown in double digits.

Reema: If you could help us with, you have told us how this quarter has been and for the holiday business this is the strongest quarter. What is the guidance on your three segments in the coming quarters on travel, on your vacation ownership that is Sterling Holidays as well as on the forex business?

A: On the foreign exchange side we are just out of the Brexit and the business is just about looking up, so I am fairly optimistic about the performance for the next quarter as well as the foreign exchange side is concerned. On the travel side on the holiday side, we have just completed our winter launch. We were the first ones to go to the market with our winter. If I look at the initial trends that have come in terms of bookings, I expect this order book to be a strong one for the coming quarters.



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First Published on Aug 5, 2016 11:36 am
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