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Shares in First Choice (LSE: FCD) jumped in Tuesday morning trade after the package holiday operator reported sharply increased profits and news of extremely buoyant recent trading. For the year ended October 2000, underlying profits rose 19% and normalised earnings per share (EPS) jumped 36% to 11.3p. The total dividend of 3.9p is an 8% rise on the previous year. Current UK trading is very strong with sales in the latest 4 weeks up 30% and 40% for the winter and summer seasons respectively, with profit margins are also ahead of last year for both seasons. More News First Choice profits rise - BBC News The Fool's Eye View This has been a difficult year for tour operators. But, it looks like the sun may be about to shine on them again. The UK economy remains relatively stable, unemployment relatively low, and as judged by the latest sales numbers from First Choice, people are increasingly looking to travel abroad again. And given this God-awful UK weather, who can blame them? First Choice is no small company; it is capitalised at £576m. In a very competitive market, it is increasingly looking to differentiate itself, concentrating on specialist businesses -- lifestyle holidays which "...can provide above industry average margins and are more robust in their earnings sustainability". And judged on these results, the strategy looks to be working. The current management joined the group in 1996, and have performed an impressive turnaround, taking First Choice from loss into profit. They have a clear vision for the future, and a good record of execution. But despite today's results and management's bullishness about its specialist businesses, the business of tour operating remains as tough as ever. It is cyclical, capital intensive, and profit margins are razor thin. There's always a fine line between loss and profit. On the plus side, when things are going well, they usually go very well. First Choice is in the good phase of this particular cycle. Profits are forecast to grow rapidly, but earnings per share growth will be held back, in the short term at least, First Choice having issued shares in order to pay for its most recent big acquisition. That may have the knock-on effect of holding the share price back, as its current price to earnings ratio (P/E) of 11 is not forecast to fall rapidly. That may seem harsh, but tour operating is a tough business. Where Next?
First Choice FY profits move ahead strongly; pre-goodwill beats forecasts - AFX News