OTA eDreams ODIGEO sets sights on improving long-term profitability

OTA eDreams ODIGEO sets sights on improving long-term profitability

European OTA eDreams ODIGEO says it will continue to focus on profits and the long-term sustainability of the business even if it means taking a hit in the short term.

The firm said growth this financial year will be concentrated in the first quarter as it invests in a transformation plan ahead of reduced growth in the second half.

The Opodo-parent’s first quarter trading results to June 30 reveal a turnaround in adjusted EBITDA, or profitability, has been completed since the third quarter of 2014.

The it saw adjusted EBITDA of minus 29.5%, but following six successive quarters of improvement it stood at plus 30% this quarter.

The performance came on the back of an 11% upturn in booking volumes, and 9% increase in revenue margin to €13.8 million – the net retained income from gross value of bookings transacted.

EDreams ODIGEO reported adjusted net income up 172% to €9.2 million and improved cash position of €11.7 million having taken into account a successful debt deleveraging.

Excluding the debt repurchase, the cash position would have been €140.b million, up 14%, the firm reported.

Looking forward to full year 2017, eDreams ODIEGO said the focus will be on improving profitability and long-term sustainability.

“We aim to invest in areas that reinforce our long term sustainability and are in the best interest of the customer, even if it leads to a trade-off between short term and long term results.

“We will also reduce areas in which we are not as profitable and are not as strategic to long term success.

“On phasing, we expect a strong first half which will underpin most of the growth expected this year and which will allow us to accelerate the investments in the transformation of the business in H2 leading to a lower second half of the year.”

Annual targets for eDreams ODIGEO have been set at 10.7 million bookings, revenue margin of €463 million and adjusted EBITDA of €105 million, equating to 10% growth.

First quarter trading saw 10% growth in revenue margin in eDreams ODIGEO’s core markets of Spain, Italy and France to €70.3 million and 9% growth in non-core markets, which includes the UK, to €53.9 million.

Flight revenue margin, which in volume outstrips non-flight by a factor of four was up 9% to €98.6 million, compared to a 12% increase  for non-flight to €25.6 million.

The firm said: “Revenue margin in flight experienced solid growth due to continued efforts to improve product, re-orient price and channel performance.

“Non-flight business bookings continued to grow, driven by our core markets. Booking growth in most non-flight products, except for packaged tours which continued to decrease.

“Non-flight revenue margin grew for the third consecutive quarter. The growth was primarily driven by a 9% increase in revenue margin per booking which itself was driven by development of metasearch, non-transactional revenue growth in our cars, hotels and dynapacks business.”

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