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Sealink shares tread water as it warns on falling inbound tourism

The Sealink Travel Group Ltd (ASX: SLK) share price is down 2% to $3.88 this afternoon after the leisure and transport ferry operator told investors it expects to deliver an “underlying” net profit between $22 million and $24 million over the financial year ending June 30, 2019. For comparison it reported an “underlying” net profit of $22.1 million and a statutory net profit of $19.6 million in FY 2018.

The company that focuses on leisure ferry services for tourists on Sydney Harbour, Queensland and South Australia’s Kangaroo Island also reported that over the six-month period to June 19 2019 demand for services had been softer-than-expected as tourist numbers drop off.

Recently media reports have flagged falling tourist numbers from China and Queensland-focused tourism companies such as Experience Co. Ltd (ASX: EXP) have plunged in value after warning of falling tourist numbers. 

The company also reported it has agreed to sell two Capricornian ferries for $9.9 million, with the proceeds to be used to reduce debt and potentially help fund acquisitions. 

It’s also worth noting that Sealink’s bottom line is heavily dependent on energy prices as diesel for its ferries is a significant cost that can vary alongside global energy prices. 

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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