TUI forecasts increased sales, profit this year

German travel and shipping group TUI, which is set to change strategy with the separation of its two core activities, said it would increase sales and profit this year. TUI, the biggest European travel company, forecast sales of about 26 billion euros (41 billion dollars), or four billion euros more than last year.

"The group's profitability is expected to be boosted by the expected increase in earnings in tourism and the expected recovery of freight rates as well as other productivity increases in shipping," a statement said.

In the tourism sector, TUI estimated sales at 19 billion euros, up from 15.6 billion last year, along with a significant, but unspecified, improvement in earnings. TUI, which merged its tourism unit last year with the British operator First Choice, said that reservations for the upcoming summer season remained strong.

Meanwhile, container shipping activities were forecast to grow by seven percent this year due to "persistently strong trade activities with China."

In 2007, TUI made a net profit of 236.3 million euros, following a loss of 843.4 million euros in 2006, the group said.

Investors took the news poorly and after an initial boost, TUI shares had lost 1.63 percent to 16.86 euros in midday trade on the Frankfurt stock exchange, while the Dax index of leading shares gained 2.12 percent overall.

TUI had said it was reviewing strategy and would likely separate its shipping unit Hapag-Lloyd.

TUI also said it would examine all options for Hapag-Lloyd, including a spin-off, a merger with a peer or a sale to an investor, in what appeared to be a defeat for company boss Michael Frenzel.

He told a news conference that the company "was reviewing possible acquisitions" in tourism, but that it needed to "see what was possible with respect to competition regulations."

Frenzel also reiterated the group's interest in expanding Russian operations, following the arrival of billionaire investor Alexey Mordachev, who now owns more than three percent of TUI and is said to back the disputed TUI boss.

Meanwhile, the group planned to move ahead with its break-up.

"It is in our interest to wrap that up this year," Frenzel said, though he also warned that it might take longer because it was a complex process.

TUI was open to an eventual approach from the Singapore-based holding company Temasek, which press reports have said is interested in merging its container division Neptune Orient Lines (NOL) with Hapag-Lloyd, Frenzel said.

But he added that no talks were taking place at present.

A group of German investors said on Monday that they wanted to buy Hapag-Lloyd to ensure it remained in Germany.

It was unsure whether the change in strategy would allow Frenzel to keep the post he has held since 1994 amid charges he has harmed the group's share value.

In an interview published on Tuesday in the Sueddeutsche Zeitung, US investor Guy Wyser-Pratte, who owns one percent of TUI, reiterated a demand for Frenzel to step down.

In early November the TUI boss got his mandate extended until 2012. AFP