26 May 2009

Holidaybreak to cut costs further after losses grow in first half

Holidaybreak is to cut costs and restructure its adventure business to limit the impact of the recession.

The group unveiled a statutory loss before tax of Ã&#pound;36.6 million for the six months ending March 31, compared to a loss of Ã&#pound;18.2 million in the same period in 2008.

Headline loss before tax was Ã&#pound;18.1 million in the first half of 2009, compared with Ã&#pound;14.9 million the year before.

The group said it traditionally reports an operating loss in the first half due to the seasonal nature of the camping and education businesses.

In 2008, it managed to achieve full-year profit of Ã&#pound;32.6 million.

Chief executive Carl Michel said: "The Group has performed well in the first half despite being impacted by the recession.

Ã¢â¬ÅâœThe decline in consumer confidence has reinforced the trend towards later bookings, particularly in the Camping Division.

Ã¢â¬ÅâœWe have taken and are taking the necessary steps to cut costs and restructure operations, particularly in the Adventure Travel Division.

Ã¢â¬ÅâœMeanwhile, Education, our largest division, is doing well and we are seeing signs of improved trading in Hotel Breaks.Ã¢â¬~

Ã¢â¬ÅâœCurrent trading is in line with management expectations. We will remain focused on cash generation and keeping costs under control while developing growth opportunities which we are currently seeing, both for the short and medium term.Ã¢â¬~

The group said sales for the Adventure Travel Division are down 3% year-on-year (down 4% at constant exchange rate).

"Demand for adventure trips has been adversely affected by higher prices due to the weakness of sterling, although certain softer-currency destinations, such as Turkey, are performing reasonably well," it said.

It said a Ã&#pound;1 million cost saving programme has been implemented and a further restructuring of Explore will take place in the coming months Ã¢â¬Åâœto ensure the business can trade profitably at lower volumesÃ¢â¬~.

"Due to the adverse trading performance, it has been decided to partially impair ExploreÃ¢â¬â¢s residual goodwill by Ã&#pound;9.6m," it added.

Holidaybreak's statement said the Education Division is currently 95% booked for 2009 and 34% for 2010.

Sales are currently 7% above last year's comparative on a like-for-like basis.

Sales for the current year at Hotel Breaks are 6% below last year.

Ã¢â¬ÅâœWe have taken out about Ã&#pound;1m of costs in the current year at Superbreak, primarily through headcount reduction in the call centre,Ã¢â¬~ said the statement.

Ã¢â¬ÅâœTrading is improving as we begin to see improved supplier offers (lower room rates and train fares) coupled with better availability.Ã¢â¬~

Camping sales to date are 1% down on last year in the context of a 4% reduction in capacity.

Ã¢â¬ÅâœThe division is currently over 86% booked for the whole season, in line with our expectations and compared with 88% last year, highlighting the later booking trend. Yields continue to remain strong across all markets,Ã¢â¬~ it said.

By Bev Fearis