The Helloworld Travel Ltd (ASX: HLO) share price has dropped lower in morning trade on Monday.
At the time of writing the travel agent's shares are down over 1% to $4.19 following the release of its half year results.
How did Helloworld perform in the first half?
During the first half of FY 2020, Helloworld reported a 12.9% increase in total transaction value (TTV) to a record of $3.6 billion and a 9.8% lift in revenue to $200 million.
Management advised that this was driven by growth across the Australian and New Zealand retail and corporate travel divisions, in addition to the inclusion of prior year acquisitions of Show Group and Williment Travel and the current year acquisition of TravelEdge.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $48 million, which was up 14.8% on the prior corresponding period. This was the result of its underlying EBITDA margin lifting from 23% to 24% during the half. It excludes one-off business acquisition expenses and discretionary payments made to support agents impacted by the collapse of Tempo Holidays and Bentours.
On the bottom line, Helloworld reported a profit after tax of $22.7 million and diluted earnings per share of 18.2 cents. This was a 4.1% and 1.1% increase, respectively, over the prior corresponding period.
Despite this, the board elected to lift the company's interim dividend by 12.5% to 9 cents per share.
Segment performance.
The Australian segment generated TTV of $3,020.1 million and revenue of $162.5 million. This was up 10.8% and 11.7%, respectively, thanks to acquisitions and strong growth in its Flight Systems business. Underlying segment EBITDA increased 14.4% on the prior corresponding period.
The New Zealand segment generated a 33.1% lift in TTV to $512.8 million and a 14.2% increase in revenue to $32.3 million. This was driven by its expanded retail member network and increased retail sales volumes. Underlying EBITDA grew 15.5% to $6 million.
The Rest of World segment acted as a drag on proceedings and posted a decline in TTV and revenue. Management blamed this on the sale of the Insider Journeys business and challenging market conditions in the United States. The segment generated an underlying EBITDA loss of $0.3 million, which was flat on the prior corresponding period.
Outlook.
In the second half Helloworld expects its retail leisure, wholesale leisure, and corporate businesses to be impacted by the coronavirus outbreak. As a result, it expects minimal growth, if any, compared with the prior corresponding period.
Combined with the bushfire impact, management expects to deliver underlying EBITDA at the bottom end of its $86 million to $90 million FY 2020 guidance range. This assumes there is no further material change in trading conditions over the remainder of the financial year.
