TUI AG says 1 billion euro profit target coming into reach

BERLIN (Reuters) - German travel and tourism group TUI AG (TUIGn.DE) said its target of 1 billion euros (£789 million) in core profit was coming into reach in the current year as it reported its final set of results ahead of its merger with TUI Travel.

London-listed TUI Travel (TT.L) and TUI AG, the British company's biggest shareholder, reached an agreement in September on the terms of a 6.5-billion-euro merger to create the world's largest leisure tourism group.

The deal will complete on Dec. 17, with a name for the new group to be announced next week.

TUI AG Chief Executive Friedrich Joussen said on Wednesday the target of reaching 1 billion euros in core profit this year also applied to what will be the merged TUI group. He said the new group's turnover would rise between 2 percent and 4 percent in the current fiscal year to the end of September.

After a period of restructuring, TUI AG is now investing in growth, expanding its hotel portfolio and buying more cruise ships for TUI Cruises. Joussen said the merger with TUI Travel would give the growth plans further momentum.

Its Hapag-Lloyd cruise division, which offers luxury and expedition cruises and which has struggled to turn a profit, would break even in 2014/15, he said.

TUI AG reported underlying earnings before interest, tax and amortisation for the financial year to end-September 2014 up 14 percent to 868.5 million euros, against forecasts for 860 million euros in a Reuters poll.

TUI AG proposed a dividend of 0.33 euros per share, up from the 0.15 euros paid out for the last financial year.

(Reporting by Victoria Bryan; Editing by Kirsti Knolle and Prateek Chatterjee)