Helloworld Travel Limited (HLO) has reported a $21.5 million loss for its half-yearly review before tax compared to a $32.9 million profit before tax in the first half of 2020. However, the company says it is confident that lifting border restrictions will translate into an enormous demand for travel and most particularly international travel when it resumes.
Despite the expected loss due to what it described as a ‘calamity’, Helloworld remains upbeat, saying in its announcement to the ASX today: ‘Thanks to the efforts of so many people at HLO, including our amazing agents throughout Australia and New Zealand, the business is in a good position to confront the challenges still ahead and then re-emerge as the world opens up again.’
Total turnover (TTV) for the December half (based on the half-yearly review) was $432.9 million, down 87.8% on the same period last year.
TTV, however, did improve throughout each month of the half of the year, with December coming in at the highest level so far in this financial year at $93.8 million, although this was down 82.3% on December 2019.
As a significant element of the total turnover, Australian TTV was $378.6 million, down 87.5% on the same period last year where it previously saw a profit of $3 million.
A network largely unchanged to date
The company said that over the last six months, a number of multi-agency owners have consolidated some of their outlets while other agencies have “hibernated’ their businesses until such time as international travel resumes and are operating from home.
HLO said that the network size has remained largely unchanged in Australia, with a total of 1,895 agencies versus 1,891 at the same time last year across their Helloworld Branded & Associate Networks, Magellan Travel, Helloworld Business Travel, My Travel Group and MTA Travel members.’
JobKeeper’s ending on March 28 could change those numbers, though let’s hope not as the collective industry rallying continues to push for continued federal government.
New Zealand however, has impressively grown their network, increasing 17% from a total of 428 agencies last year to 501 this year across their Helloworld Branded & Associate Networks, My Travel Group, and Travel Brokers members.
HLO said it expects business to remain at about 15-20% of previous levels until mid-2021, with any further improvement dependent on consistently open state borders and the opening of some trans-Tasman and South Pacific travel bubbles.
Domestic retail sales, particularly in Australia, have shown rapid signs of recovery when borders are consistently open the company said, pointing out that consumer confidence is still fragile but saying ‘we believe that if Australia can maintain open borders between the States and a trans-Tasman bubble can open up, the demand for interstate and trans-Tasman travel will grow dramatically.’
Head office personnel costs, which the company says make up circa 55% of Its overheads, have been reduced by almost 70% over the first half of the financial year compared to last year which has had a significant impact on the operational ability to ride out the pandemic.
Despite paying out $3.5 million in one-off redundancy costs over the last six months, HLO says that they are continuing to invest in their people to ensure they have the best people in the right roles and an ability to scale up as required in the future.
Helloworld closed their half-year reporting by saying: ‘Based on international travel recommencing in 2022 and on a significant uplift in domestic sales as State borders remain consistently open, we are confident this will translate into an enormous demand for travel and most particularly international travel when it resumes.’
“In the meantime, Helloworld will continue to focus on the demand for domestic travel while our international borders remain closed while ensuring we are ready to handle the rapid growth in international travel once that becomes possible.”
Based on current expectations, HLO says they will continue to incur cash losses of approximately $1 – $1.5 million per month for the next six months, moving to a modest profit in the first half of 2022 and improving in the second half.
In terms of liquidity, HLO says they have sufficient funds to maintain operations beyond the end of 2022 on current liquidity levels and cash burn rate.
“This isn’t some faraway dream. It’s what we’re heading towards and it’s what we will get to in the next 12 – 18 months.” They said.
Read the full ASX announcement here.
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