Ebookers Reports First Adjusted Profit, Shares Fall Despite Encouraging Growth

Ebookers, a leading online travel group, reported its first-ever adjusted profit yesterday, but the company's shares took a hit, declining by nearly a quarter of their value. The company's pre-tax losses were £14.9m, but the adjusted profit of £1.3m was below expectations. The group's margins were lower than expected, and concerns about the UK market, along with renewed fears of terrorism, contributed to the decline. However, the company's growth in the online travel industry remains strong, with a 69% increase in organic internet growth up to March 18.

Key Takeaways:

• Ebookers reported its first-ever adjusted profit of £1.3m, which was below expectations of £2.4m.
• The company's pre-tax losses were £14.9m, with a loss of £12.3m in 2003.
• Margins were lower than expected, with a 10% margin on flights, but a lack of ability to cross-sell higher-margin business such as hotels and car rentals.
• The company aims to cut costs from 12.7% of gross sales to 8.5% by consolidating on systems and cutting staff.
• Ebookers will cut staff, close nine retail outlets, and standardize on systems to reduce costs.
• The company's chairman, Dinesh Dhamija, expressed optimism about the company's growth, citing a 69% increase in organic internet growth up to March 18.

Statistics:

• £1.3m: Ebookers' adjusted profit for the year to December 31.
• £14.9m: Ebookers' pre-tax losses for the year to December 31.
• £12.3m: Ebookers' losses in 2003.
• 69%: Growing organic internet growth up to March 18.
• 10%: Margin on flights.
• 12.7%: Current costs as a percentage of gross sales.
• 8.5%: Targeted costs as a percentage of gross sales.

Sources:

• Ebookers
• FT Comment