Press release
Novaturas Group’s 9M 2019 financial results were affected by fierce competition coupled with softer demand for outbound trips due to hot summer weather in the Baltics. This precipitated oversupply on the marketplace, thereby affecting the profitability of tour operators. In turn, Novaturas expects to generate robust results in the 2019/2020 winter season. Early bookings for next year’s summer season also look promising.
238 thousand people took advantage of the Novaturas Group’s services during the first nine months of 2019, i.e. down 2.3% from the corresponding period of last year. This decline pertained chiefly to the Lithuanian market where Novaturas’ client numbers dipped 7.9% from the previous year. The Group generated a positive sales growth rate in the other Baltic countries with client numbers in Latvia climbing by more than 9% and in Estonia by more than 1.4%.
As the average sales price for package tours is slightly up year on year, the Novaturas Group’s revenue year-to-date in the first three quarters of 2019 was EUR 139.6 million, down slightly (by 0.5%) versus the first nine months of 2018.
“This is the second year in a row in which we have observed an oversupply on the tourism market in the Baltics. It stems mainly from two factors. First, the market’s very rapid growth in previous years attracted new players, thereby considerably increasing the level of competition. Second, the demand for outbound trips slumped on account of hot summers that invite people to switch to local tourism instead of going abroad,” explains Audronė Keinytė, CEO of Novaturas.
“We has effectively defended our position as the largest tour operator across the three Baltic countries in the face of these challenging conditions. In the meanwhile, some players have not been able to withstand fiercer competition”, points out A. Keinytė.
She also adds that due to tourism industry specifics, our current situation is determined namely by decisions made over a year ago as clients tend to plan their vacation in advance and book early. The Novaturas Group’s gross profit in the period from January to September of this year was EUR 16.2 million (down 20% y/y), with EBITDA of EUR 3 million (-59%). Net profit in this period was EUR 1.3 million versus EUR 5.7 million one year ago.
The Management Board of the Novaturas Group expects the situation to improve during the final months of the year. “After a soft July and August, we have recorded a clear rebound in sales in September. We have also prepared an attractive and diverse offer for the 2019/2020 winter season that has been received very well – the results of bookings up to the end of September are very promising – we have recorded an increase in the number of reservations with visibly higher profitability than last year”, explains CEO of Novaturas.
Novaturas Group is happy to observe that more and more travelers are choosing not only beach holidays but also sightseeing tours. Sightseeing tours by plane increased by 40,4%, sightseeing tours by bus – by 14,8%. Sightseeing tours by plane area offered to all Baltic markets.
Novaturas Group has kicked off early bookings for the summer 2020 seasonal offer earlier than usual, namely in August of this year. For the first time, clients were offered to plan their summer holidays in long haul exotic destinations - Bali and the Seychelles. Next year travelers will have an opportunity to spend their vacation in Greek island of Kefalonia, the emerald Slovenian Riviera or the Istria Peninsula, one of the most interesting regions of Croatia. Novaturas Group has observed very extensive interest in the offers for next year. However, Turkey invariably continues to enjoy the greatest popularity among the clients of the Baltics.
Novaturas Group – selected financial results
|
(EUR 000s) |
9M 2019 |
9M 2018 |
y/y change |
|---|---|---|---|
|
Revenue |
139 571 |
140 240 |
-2,3% |
|
Gross profit |
16 158 |
20 304 |
-20,4% |
|
EBITDA |
3 015 |
7 373 |
-59,1% |
|
Net profit |
1 341 |
5 656 |
-76,3% |
About Novaturas
Novaturas Group is the leading tour operator in the Baltics states. Since 21 March 2018, Novaturas shares have been dual-listed on the Warsaw Stock Exchange and on Nasdaq Vilnius.
Novaturas was established in 1999, became the market leader in the Baltics in 2004. Aside from the Baltics, Novaturas has begun offering its products in Belarus, where they are retailed through local partners.
Novaturas continues to attract new clients thanks to its attractive and diverse offering and the high quality of its services. The Group offers both summer and winter package holidays as well as sightseeing tours by coach or plane to more than 30 destinations worldwide, including the most popular holiday resorts in Southern Europe as well as select locations in North Africa, the Middle East, Asia and Latin America.
The Group's strategy also aims to retain diverse and complementary distribution channels. Novaturas works with over 400 travel agencies, including all of the major agencies in the Baltics. It also operates retail offices of its own in main cities of Lithuania, Latvia and Estonia, and is investing in further development of its e-commerce channel.
The Company’s asset-light business model, which is characterized by strong cash flows from operating activities and low capital expenditures, allows it to pay out a large part of its earnings to shareholders. Paying regular dividends is one of the key elements of the Company's strategy. Every year the Management Board expects to propose for distribution 70% – 80% of the Company’s net profit.