Since the first quarter of 2020, tourism sector has been facing and operating in a new reality of constant changes. Due to restrictions caused by the pandemic, only in July the Company was able to partially resume its operations in all Baltic countries. Constantly changing morbidity rates calculation rules and different state regulations in all the Baltics resulted that the Company could not resume flights to most of its holiday destinations. Because of these reasons this year Novaturas group could offer holidays only in few countries - Greece, Tunisia and Cyprus. This undoubtedly affected 9 months results - revenue amounted to EUR 30.5 million (at the same time last year – EUR 139.6 million) and net loss reached EUR 3.7 million (we earned a net profit of EUR 1.3 million in the corresponding period in 2019).
To ensure the Company's liquidity and improve future performance ratios, Novaturas group continued to adhere to the crisis period program. The main aspects of this program are strict cost-saving policy, absorption of states aid measures, cash flow regulation.
The Company managed to consistently optimize its costs throughout the crisis. During the first three quarters of 2020 operating expenses were reduced by 61.1% if compared with the respective period in 2019. The Company has reached the agreement with the bank to delay payments of a long-term loan and extend the overdraft until the end of March 2021. These decisions and agreements helped to ensure the Company's liquidity until it can operate more sustainably.
The Company has actively worked with the governments and responsible institutions of the Baltic States. Novaturas group has acquired a loan of EUR 1 million in Latvia and long-term loan of EUR 5 million in Lithuania. The Estonian and Latvian governments have supported the Company with EUR 60 thousand and EUR 81 thousand subsidies. Repatriation compensation of EUR 167 thousand has also been received in Latvia. The Company in all markets have used a salary compensation of EUR 233 thousand. These state aid measures are crucial for balancing cash flows and are used both for ensuring the Company's liquidity and refunding the travelers. The Company continues to seek dialogue with the governments on the most sustainable and effective solutions to secure the future of the tourism sector in the face of an unprecedented crisis.
Strengthening relations with travelers
“We appreciate our travelers expressed confidence in the tourism sector during this unsettling period. Most of our travelers have agreed to postpone trips affected by COVID-19 restrictions. Postponed travel reservations amount up to EUR 5.8 million. Part of travelers chose vouchers as an alternative for cancelled trips. Value of these vouchers reaches EUR 1.3 million. In total group wide we have received requests for refunds for about EUR 8 million. To the date, we have returned around EUR 5.5 million. For this matter in Lithuania we additionally agreed on EUR 1 million long-term loan, which allowed to refund part of the cancelled trips. We were one of the first to start refunding money for cancelled trips," says Audronė Keinytė, Head of Novaturas Group.
To strengthen the relationship with travelers and to ensure their good experience, the Company took over the core business of the subsidiary “Sofa Travel”. Centralization of customer service processes is one of the planned steps to make Company's own sales channels more effective. This will help to adapt to the newly forming traveling habits, improve the experience of the travelers, maintain high standards of services provided.
New product launch
In June the Company introduced new product to the market – domestic traveling. Novaturas group has offered accommodation services and sightseeing trips in Lithuania and since the end of July – holiday options in all the Baltics. The revenue of local tourism in the Baltic States in July-September reached 4% of total revenue generated by Novaturas group during the relevant period. Interest in local tourism is gradually growing and the Company will continue to develop it.
According to the Company, people who could not travel during their vacations this year are willingly planning their holidays next year. It influenced to open sales of 2021 summer and 2021 - 2022 winter holiday seasons unusually early. Tourism infrastructure has already adapted to new health and safety requirements. Safe traveling recommendations have already become a part of people’s daily lives and it results in more confident future holidays planning.
Financial results of 9M 2020:
|
|
9M 2020 |
9M 2019 |
Change, % |
|
Revenue |
30 554 |
139 571 |
-78,1 |
|
Gross profit |
3 429 |
16 158 |
-78,8 |
|
EBITDA |
-1 581 |
3 015 |
- |
|
Net profit |
-3 694 |
1 341 |
- |
About Novaturas Group
AB “Novaturas“ Group is the largest tour operator in the Baltic States, offering summer and winter package holidays in more than 30 destinations worldwide and more than 100 sightseeing routes. In 2019, the group served more than 293 thousand customers.