Fubotv earnings beat by $0.10, revenue topped estimates
Investing.com -- Moody’s (NYSE:MCO) Ratings has upgraded the corporate family rating (CFR) and the probability of default rating (PDR) for TUI (LON:TUIT) AG, a leading global tourism company. The CFR has been upgraded to Ba3 from B1, and the PDR to Ba3-PD from B1-PD. In addition, the ratings agency has upgraded the €500 million backed senior unsecured notes due 2029, issued by TUI, to Ba3 from B1. The company’s outlook has been revised to stable from positive.
The ratings upgrade is a result of TUI’s better-than-expected results in fiscal year 2024, which led to improved credit metrics. TUI’s Moody’s adjusted Debt/EBITDA was 2.3x, and an adjusted EBITA margin of 6.5% was reported. Furthermore, TUI generated a positive Moody’s adjusted Free Cash Flow (FCF) of €188 million.
In the first quarter of fiscal year 2025, TUI experienced a 2% increase in bookings for both the Winter 2024/2025 and the Summer 2025 seasons. This indicates resilient customer demand, despite challenging macroeconomic conditions in TUI’s main source markets.
The company’s actions to support profitability are expected to keep Moody’s adjusted leverage stable over the next 12 to 18 months. Liquidity is also expected to remain adequate due to enhanced cash-flow generation and an expectation of no aggressive dividend distribution.
TUI’s growth across all business segments in fiscal year 2024 resulted in a positive Moody’s adjusted Free Cash Flow (FCF) of €188 million. The company’s Debt/EBITDA improved to 2.3x from 2.6x in fiscal year 2023, and the EBITA margin rose to 6.5% from 5.8% in fiscal year 2023.
The company’s future growth is expected to be supported by the delivery of new vessels, hotel investments, and the ongoing implementation of its asset-light and digitalized model. Growth is expected to be in the low single digits over the next 12-18 months.
TUI’s use of hedging instruments to hedge currency and fuel price risks is expected to support the group’s profitability. The company’s Moody’s adjusted EBITDA margin is expected to hover slightly above 9% in the coming 12-18 months.
TUI’s liquidity, viewed as adequate by Moody’s, was around €1.9 billion as of December 31, 2024. This comprises €0.9 billion in unrestricted cash and about €1.1 billion in undrawn Revolving Credit Facilities (RCF) out of €1.7 billion total cash commitments.
Factors that could lead to a future upgrade or downgrade of the ratings include the company’s ability to demonstrate resilience in its business model and improve profitability, maintain a gross leverage ratio below 2x, and ensure available liquidity does not drop below €1.5 billion.
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