Shares in online accommodation booking company Hostelworld plummeted by as much as 11% on a near halving of first half profits and its warning of little or no growth in bookings for the year as a whole.
The Dublin-headquartered company posted a pre-tax profit of €2.83m for the first six months of the year, down more than 45% on the €5.17m for the same period last year.
First half revenue slipped €4m, or 9%, to €42.6m.
The company, which has recently replaced both its chief executive and chief financial officer, said the recent hot weather coupled with the World Cup dented bookings, which were up 2% year-on-year.
“The market, particularly in Europe, is increasingly competitive,” said new chief executive Gary Morrison, who said the first half financial performance was as expected.
“In addition, the World Cup and the unusually hot weather in Europe have also led to a softness in bookings in the peak summer months of July and August. If these trends continue, like-for-like, growth in group bookings is likely to be flat for the full year given the expected declines in our supporting brands,” he said.
Hostelworld’s shares were down by up to 11% in early trading, but the stock pared back some of the losses to close down by just over 5%.
Mr Morrison replaced former chief executive Feargal Mooney in June.
The company yesterday announced former PwC, GE Capital, Eir and Microsoft executive TJ Kelly as its new chief financial officer, succeeding Mari Hurley.
Mr Kelly is chief financial officer at Glanbia and will join Hostelworld in November.
Mr Morrison said the global roll-out of Hostelworld’s free cancellation booking option will further enhance the company’s competitiveness, adding the company “has the ability to continue to be the online travel agent of choice for the experiential/backpacker traveller”.
He said he would be presenting further detail of the new management team’s plans for developing the business later this year.
“Hostelworld is in a period of transition and a new management team, enhanced product flexibility and significant growth through the app channel provide a solid base for mid-term growth. However, a softer booking trend in July and August — key months for the business — means that near term expectations will be scaled back. For 2018, we expect an approximate 11% downgrade to consensus forecasts,” said Davy Stockbrokers.
Hostelworld had cash balances of almost €23m at the end of June and declared an interim dividend of 4.8c, slightly down on last year.