Priceline reports $1bn second quarter profit but urges caution

Priceline, the world’s most valuable travel company, has reported a 34% increase in gross profits to $1 billion in a second quarter trading update but warned of uncertainty in Europe.

The parent projected a further increase of 15% to 20% in profit in the third quarter but urged caution in its forecast due to the global financial crisis, particularly in Europe.

Revenues in the quarter to the end of June were $1.3 billion, a 20.3% increase on the previous year with international operations contributing $859 million of that, a 40% increase on 2011.

The overall value of all the bookings taken by Priceline in the period stood at $7.3 billion, a 26.8% increase on a year ago. Operating income was $458 million, up 41.2%.

In the third quarter Priceline expects to see total gross travel bookings increase by 10% to 18% and international gross travel booking to rise 12% to 20% while revenue is set to go up by 9% to 15%.

Jeffery Boyd, president and chief executive of Priceline, said the figures from the US-based giant were “market leading”.

“The Priceline Group achieved solid results for the second quarter despite economic uncertainty across Europe, Asia and the US that intensified as the quarter progressed.

“We believe the Group delivered market leading growth from both a top line and profitability perspective.

“Globally, our hotel business booked over 50 million hotel room nights, up 39% over the same period last year.

“Our global rental car business grew rental car days by 29% over last year, led by continued strong growth for”

Boyd added: “The Group’s international hotel business continues to perform well in the face of difficult macro-economic conditions and the strengthening dollar, which put pressure on top-line growth rates.

“We will continue to build our franchise by investing in geographic expansion and acquisition of hotels and accommodations, product and service innovation, and customer acquisition.”

Although relatively upbeat about future prospects the Priceline results included the following warning about the global financial situation:

It said “its guidance reflects current operating trends and an assumption that economic conditions in Europe will further deteriorate.

The statement said: “The Company believes that concerns related to sovereign debt and the viability of the euro have negatively impacted historical operating results and are likely to impact future results.

“Given the uncertainty surrounding worldwide economic conditions, particularly in Europe where much of the Company’s business is concentrated, the Company believes the variability around its guidance is greater than is usually the case.”

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