“Lies, damned lies and statistics” a phrase often attributed to Disraeli, is used to describe the persuasive power of numbers, particularly the use of statistics to bolster weak arguments. Some of the headlines used in Thomas Cooks third quarter results last week seemed to lend some strength to the adage.
“The 12th consecutive quarter of improved profitability”, trumpeted Cooks, whereas;
1. Underlying operating profit fell by 9% from Q3 2014 to Q 3 2015
2. The 2014 Q3 loss from operations was £42m. So how can 2015 have seen the 12th consecutive quarter of improved profitability.
3. The loss before tax in Q3 2104 was £81m. in Q3 2015 it was £44m. Can even the near halving of a loss, be in any way described as an improvement in profitability
Even comparing the 12 month figures, rather than just Q3 figures, Cooks made a loss before tax of £137m.in the 12 months to June 2014 as against a loss before tax of £14m. in the 12 months to June 2015. That again represents a reduction in losses, not an improvement in profitability, or am I missing something.
“Operating profit improved by £53m for the quarter.”
Did it really? Q3 2014 operating loss was £42m which improved to an operating profit of £3m in Q3 2015.
Hang on, do I hear you say, 42 + 3 = 45. How does TCG get 42 plus 3 to equal 53. It doesnt. It adds it up correctly to get £45m. and that is the real total improvement but then it uses a like for like figure to make what appears to be a false comparison and a better headline, by claiming a “profit improvement” of £53m for the quarter.
That 53m is not the improvement in TCGs total profitability for the quarter. It is its improvement purely on a like for like basis but it does look better than the real total of £45m
And Cook admits that it uses like for like figures, “to improve the comparability of prior year data”. It certainly does, especially if it uses them to make the wrong comparison.
There may be some explanation somewhere but just at the moment I can not think of one.
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