The first quarter of 2020 was marked by extraordinary circumstances for the entire tourism sector with the global travel business being affected by the COVID-19 virus. After successfully starting the year, Novaturas Group has faced the spread of the virus from mid-February, which affected the company's financial results.
At the end of February, the Company suspended flights to Italian ski resorts, and after the introduction of isolation measures by the Baltic governments and responsible authorities, all organized trips were temporarily suspended in March. This surely affected the financial results of Novaturas Group: revenue decreased by 18.9% and profitability by 28.8% compared to the same periods last year.
The pandemic caused the Company an additional EUR 1.164 million of costs in the first quarter of 2020 due to unearned profit and additional costs of repatriation flights. These costs were partially balanced by a reduction in operating expenses: they amounted to EUR 1.6 million in the first quarter and were 22% lower compared to the corresponding period in 2019.
"To manage the situation, we have taken strict cost control, suspended investment projects, focused even more operational efficiency, negotiated with foreign partners and suppliers for more flexible pricing and review of existing commitments, and intend to use state aid measures. Effective and fast decisions of the Baltic governments are critical for one of the most affected by COVID-19 sectors today”, says Audronė Keinytė, CEO of the Novaturas Group.
The beginning of the year was marked by the typical choices of our travelers
During the first quarter of this year, travel packages remained the most valued choice for Baltic travelers. The most popular holiday destination during this period was the sunny Egyptian resorts, followed by the Canary Island Tenerife. Ski trips accounted for 12.1 percent. Before the pandemic closed the borders of the world, the demand for long-haul exotic destinations had increased by 1.4 percent.
Distribution of sales channels in Q1 2020 remained similar as before - the share of travel agency sales accounted for 70.5%. (1% less than in the corresponding period last year). Sales online and through own agencies accounted for 15.1 percent, compared to 12.8 percent in Q1 2019. During the three months of 2020, the Company's websites were visited by 1.15 million unique visitors, and that was 6 percent more than during the corresponding 2019 period.
Extremely flexible conditions for travelers to postpone trips
Since the beginning of the pandemic, Novaturas Group together with the industry has been working with governments in Baltics to adapt existing consumer rights regulations to this extraordinary situation. Until the regulatory processes for pandemic-affected and cancelled trips are completed, we offer our travelers extremely flexible conditions to change their vacation plans. To offer customers the best conditions for postponing holiday plans to later times, we record early introduced 2020-21 winter and 2021 summer seasons.
Novaturas Group operates on a asset-light business model, which offers a lot of flexibility and allows you to react quickly to changing circumstances. In today's situation, this is a huge plus, as it minimizes the exposure of the crisis on business.
"It seems that we will get out of the current crisis in stages and we have really changed. We understand that travel habits will change, security requirements for travelers, accommodation and transport providers will increase, and travel planning habits will also change. Therefore, we are preparing to successfully raise our wings again as soon as the restriction period is over. We firmly believe that once the pandemic is under control, travel will return to the lives of us all.
Novaturas Group Q1 2020 financial results
|
(EUR 000s) |
3M 2020 |
3M 2019 |
y/y change |
|
Revenue |
23 363 |
28 806 |
-18,9 |
|
Gross profit |
2 535 |
3 559 |
-28,8 |
|
EBITDA |
-190 |
83 |
- |
|
Net profit |
-353 |
-148 |
+135,5 |
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.