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Southern Travel's quest for profitability set back by Japan, Christchurch disasters

Monday 12th September 2011

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Southern Travel Holdings, the travel agent that gets the bulk of its sales from inbound tourists, reported a narrower full-year loss, saying disruptions from the Christchurch and Japanese earthquakes pushed back its quest for profitability.

The net loss was $638,000 in the year ended June 30, from a loss of $932,000 a year earlier, the company said in a statement today. Sales climbed 23% to $26.7 million.

Southern Travel is targeting a “small profit” in 2012, excluding foreign exchange changes, which would mark the end of three years of losses. Staff costs rose 18% in the latest year, though this included increases in the New Zealand dollar employee costs for overseas workers, mainly in Australia, it said. As at June 30, the company had 112 workers in five countries.

The shares haven’t traded today and were last at 5 cents. In the past 12 months they have lost about two thirds of their value.

Restructuring of the inbound traveler division had put the company on track for a turnaround in the first six months of the year but natural disasters “resulted in cancellations and a decline in forward bookings during what would otherwise have been a key trading period for the inbound operations,” it said.

“The changes to our revenue base were immediate and well in excess of the changes we could make to our related cost base,” it said. Sales grew on increased business volumes in both inbound and outbound.


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