Wotif profit slides as trading remains soft
Wotif has warned that first half profits will fall amid soft demand and cautioned that the outlook for the second half did not look much rosier.
After tax profits are expected to hover between $21.9 million and $22.6m in the six months to December, compared to $27.5m in the same period last year.
The remainder of the financial year looked “volatile”, Wotif said, with retail conditions in Australia and New Zealand “continuing to be soft”.
The profit warning sent shares tumbling by as much as 30%.
Wotif said Total Transaction Value (TTV) is likely to be flat in the first half with flights and dynamic packaging helping to offset a 5% decline in Australia and NZ accommodation.
Revenue is expected to rise 4.5%, helped by commission increases from 10% to 11% and growth in flights and packaging, where early indicators have been “extremely positive”.
But the firm said the commission benefits will be diluted by the accommodation shortfall.
Operating costs are expected to rise by up to $9m, with an additional $4m spent on marketing and $3.8m on wages behind the increase.
Wotif blamed the “extremely competitive online advertising marketplace” for the sharp rise in marketing costs while 40% of the salary bill increase relates to the employment of more IT staff.
Chief executive Scott Blume said the business has made progress in the roll out of its strategic pillars, which include packaging, technology and an Asian marketing plan.
“Many of those initiatives will result in improvement to the business in the medium term and, to some extent, the current fiscal year is a year of transition,” he said. “That said, we need to continue to work hard to sustain and grow our core ANZ accommodation business as we build new business initiatives.”
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