6M 2020 financial results of Novaturas Group: COVID-19 caused a net loss of EUR 2.2 m, ready for the new reality
Novaturas Group successfully started the beginning of 2020, but later on, with the global tourism industry faced the unprecedented impact of COVID-19. Due to the restrictions caused by the pandemic, the Company suspended its operations from mid-March to July, which had a negative impact on the financial results. During the first half of the year, Novaturas Group's revenue amounted to EUR 23.5 million (compared to EUR 83.3 million last year) and experienced a net loss of EUR 2.2 million (earned a net profit of EUR 0.4 million during the corresponding period last year).
And yet the biggest crisis in the history of tourism is managed by the Company smoothly and efficiently. When the state borders closed in the middle of March, Novaturas Group repatriated home from various corners of the world more than 2000 travelers. The Company immediately undertook strict cost savings and dropped non-priority activities and projects, but sought to save jobs as much as possible. Compared to the first half of 2019, operating expenses decreased by 57.2 percent this year and amounted to EUR 3.6 million (was EUR 8.5 million during the corresponding period of previous year).
To manage the situation and ensure liquidity, the Company agreed with the bank on the deferral of the existing loan and the extension of the overdraft; actively worked and continues to work with the governments and responsible authorities of the Baltic States on business support measures. Novaturas Group has acquired a long-term liquidity loan of EUR 1 million in Latvia, EUR 5 million in Lithuania. The Estonian government has supported the Company with a subsidy of EUR 60 thousand. Subsidy of EUR 135 thousand was used for salary compensation. Cooperation with state institutions continues, and sustainable business continuity solutions are being sought during this difficult period for the entire industry.
"Seasonality is very significant in the tourism sector, therefore, like many other tourism companies, we have faced the challenges of balancing cash flow, which has been overcome with cost reduction and stated aid measures," says Audronė Keinytė, Head of Novaturas Group. She adds that the successful reduction of operating expenses, the asset-light business model that provides agility, the prompt partial restart of operations to safe European destinations, and the Company's focus on digital sales channels show that Novaturas Group adapted to the new reality successfully.
Safe travel is the norm in the new reality
The Company also thanks to all its customers for their trust during the crisis, who appreciated the long-term experience and the exceptional quality of the travel services. The majority of clients have agreed to postpone trips affected by COVID-19 restrictions, which is very important for the Company as it enables planning loads for the summer season of 2021. For those who did not want to postpone the trip, Novaturas Group was one of the first to start refunding for the cancelled trips.
Adapting to the situation, Novaturas Group also offered local tourism in Baltics - accommodation services in the most beautiful resorts, and in Lithuania - sightseeing trips by bus.
Novaturas Group has restarted partially its operations to safe European countries since July; the top destination is Greece. This is the peak of holidays for Baltic tourists, so interest is observed. The principles of safe travel (wearing a face mask at airports, on planes or keeping a safe distance in hotels) are no different from the rules of social life that have already become routine, so they do not hinder those who miss a holiday. The Company constantly works with partners in destinations and takes care to ensure maximum safety of travelers; is also ready to offer more directions as soon as they are safe.
Shareholder change and even more effective management
During the first half of the year, Novaturas Group underwent changes in its shareholder and corporate governance structures. After the withdrawal of the Central European Tour Operator, three companies from Estonia joined the shareholders: 10.25% of shares were acquired by Rendez Vous OU, 9.99 percent - Moonrider OU, owned by the Estonian investment company Go Group, 5.25% of shares are now owned by Rondam AS. All the new shareholders are involved in the tourism business, and their trust in the company in this challenging period shows confidence in the long-term business perspective.
The wide shareholder structure will benefit the Company to work even more transparently and efficiently. The Group's corporate governance structure changed at the end of June will also contribute to this: the supervisory board was replaced by a new management board to which part of the supervisory functions has been delegated. The new board consists of Janek Pohla, Vidas Paliūnas, Ugnius Radvila, and two other members - Virginijus Lepeška and Andrius Jurkonis - are independent. The former board members form a team of top executives.
Changes in corporate governance have simplified the management of the group of companies, and greater involvement of independent members will provide opportunities to supplement the existing management competencies, introduce new approaches and solid governance practices.
Financial results of the first half of 2020:
About Novaturas Group
Novaturas Group is the leading tour operator in the Baltic States. As of March 21 2018, Company's shares are dual-listed on the Warsaw and Nasdaq Vilnius stock exchanges.
The Company was established in 1999, became the market leader in the Baltics in 2004. Products of Novaturas Group are currently offered in all Baltic countries. Travelers value Novaturas Group for the high quality of its services, reliability and variety of travel offers.
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 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 developing its own e-commerce channels.
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.