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Travel giant Thomas Cook has reported a 12 per cent increase in pre-tax profits for the 2017 year to September, though underlying earnings in the UK business fell 34 per cent amid rising hotel prices, the value of pound and intense competition in Spain.
Pre-tax profits for the year rose to £46m on a 15 per cent increase in reported revenues to £9bn.
The company’s shares fell 13.7 percent in early deals, hitting its lowest level since July, after it announced that its margins in Britain were lower after four consecutive years of profit growth.
Tour operators and airlines have ramped up capacity in Spain and other Western Mediterranean destinations, in response to security concerns in other markets such as Tunisia and Turkey. That has prompted a price war among tour operators to Spain, while allowing hotels to ramp up prices that Thomas Cook must pay, squeezing margins from both sides.
Thomas Cook said it was “well positioned” to achieve current market expectations for 2018, given strong early bookings for the summer.