TUI TRAVEL, Europe’s largest tour operator, reported record full-year profit and raised its dividend as the company sold more holidays online to combat unrest in northern Africa and weakening consumer confidence.

Underlying operating profit, which excludes one-time items, advanced 18 per cent to £471 million (€548.7 million) in the year through September, TUI Travel said in a statement.

That beat the £467 million average of six analyst estimates compiled by Bloomberg. TUI Travel highlighted the strength of its balance sheet after ending the financial year with net cash of £4 million. Its main rival, Thomas Cook Group, had net debt of more than £900 million as of June 30th, and last month got an emergency £200 million loan from lenders to help see it through the seasonal low period of cash for tour companies. TUI is expanding its online accommodation business and offering more speciality holidays to combat weakness in traditional bookings.

“We had a very strong performance across most of our markets and the key factor is by offering a broad range of unique holidays that are exclusive,” said chief executive officer Peter Long. A decline in bookings since the end of the fiscal year is in line with expectations as the company reduces capacity. TUI Travel fell 1.9 per cent to 166.4 pence in London. The stock has dropped 32 per cent this year, compared to Thomas Cook’s 91 per cent plunge.

TUI Travel said bookings have slowed for the winter travel season, with declines in the UK, German and French markets, reflecting political turmoil in north Africa. A combination of units in France is progressing as anticipated. Online bookings accounted for 15 per cent of all business, TUI Travel said.

The company’s outlook shows “a very different story of bookings slowing since its last statement,” James Hollins, an analyst at Evolution Securities, wrote in a note.

Full-year net income was £85 million compared with a £123 million loss in fiscal 2010. Sales rose 8.7 per cent to £14.7 billion. Underlying operating profit in Germany increased 10 per cent as revenue rose 11 per cent, while earnings in the Netherlands more than tripled on 17 per cent sales growth. – (Bloomberg)