Club Med cuts full year profit outlook

French holiday group Club Mediterranee posted Thursday a 70 percent leap in its first-half net profit, but downgraded its full year forecast owing to uncertain global economic prospects. The travel and leisure specialist reported a profit of 17 million euros ($21 million) for the first six months of its fiscal year, from November through April, an amount that had tripled in the same period a year earlier. For its full fiscal year, Club Med was fairly cautious however, saying its profit margin "could be on the order of nine percent, depending on the size of a deterioration in European tourism markets." Its previous outlook had estimated that the profit margin would be more than nine percent, compared with 8.9 percent in the previous exercise. Sales in the first half gained 3.8 percent to 783 million euros, in large part owing to solid results at the group's various ski resorts. The current operating result of Club Med villages, a key indicator of the company's profitability, gained 13.2 percent to 53 million euros. Since 2004, Club Med has sought to move upscale and create resorts in developing countries, and it reported a 10 percent increase in countries like Argentina, Brazil, China, Mexico, Russia, Singapore, South Africa, South Korea and Turkey. They now account for around 20 percent of Club Med's clients during the Northern Hemisphere's winter. Club Med boss Henri Giscard d'Estaing was quoted by a statement as saying those countries represented "assets in a market environment that is more and more difficult in Europe." The company opened two new upscale resorts last winter in Pragelato, Italy and Belek, Turkey. A second village in China is to begin ramping up operations this summer and be fully operational early next year. Other projects are in the works in the Maldives and Morocco. After cashing in convertible bonds issued in June 2009, the Chinese conglomerate Fosun is now Club Med's biggest shareholder, with 9.96 percent of its capital. The group now has a cash reserve worth 147 million euros and has cut its debt almost in half to 123 million euros.