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Troubled travel outfit Thomas Cook (LON:TCG) saw its shares plummet by 24% to 36.78p (as of 12:30 GMT) after confirming that underlying EBIT for the year to September 2018 is expected to be down by £58 million at £250 million on a like-for-like basis. With net debt also higher than forecast at £389 million, Thomas Cook has decided to suspend the dividend for the 2018 financial year.
Despite revenues growing by 6% to £9.58 billion for the year, the firm suffered from a larger-than-anticipated decline in gross margin following the prolonged period of hot weather in the key summer trading period. As a result, the EBIT figure announced is around £30 million lower than previously guided, the firm also suffering from a number of legacy and non-recurring charges.
Into 2019, and the company is looking to improve by addressing the performance in the UK tour operator business, increasing focus on cash and cost discipline across group and improving the selling of higher-margin own-brand hotels and differentiated holidays. As a result, the year is forecast to see substantial progress on reported operating profit.