The financial crisis, currency upheavals and swine flu have taken their toll on upmarket operator Kuoni.
Sales in the first nine months of its financial year fell by more than 21 per cent to SFr2.98bn ($2.91bn), prompting a SFr5.7m loss, compared with a SFr126m profit last time. Full 2009 figures will not be out until March, but even a possible final quarter recovery will do little to wipe out overall losses.
“It’s been a tough old year. We had some indications things wouldn’t be nice, and it’s fair to say all our expectations were fulfilled,” Kuoni Chief Executive Peter Rothwell.
Poor currency movement were one of the main contributors. Although working in Swiss francs, the group generates a large volume of its sales in the UK, Sweden and India, countries whose currencies were particularly weak. “About one third of our sales fall came from currencies,” he said.
There has also been a cost-cutting programme. Total employment has fallen by about 10 per cent over the year, cutting the workforce to about 9,000. In Switzerland, many staff are on a three-day week.
The changes have also involved stripping Kuoni to just two geographical divisions – North and South – besides its established destination management business.
Rather than individual country managers creating their own packages, the group will in future offer regional bosses a central “pool” of services, such as hotel rooms, from which to choose.
Rather than moving to full centralisation, he has decided to build on the skills of the company’s most successful parts.
Kuoni’s big Scandinavian arm regularly negotiated the keenest deals from eastern Mediterranean hoteliers: now, it has been given that responsibility group-wide.
Other savings will come from streamlining catalogue operations, moving finally to a common computer reservations system, and boosting online sales and direct bookings.
Kuoni recently raised about SFr250m through a bond issue and by remortgaging its headquarters. The additional funding will not only help protect against tough times ahead, but also provide cash for any bigger acquisitions.