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Wotif fortunes leap but helloworld under scrutiny

March 21, 2014 Corporate, Headline News No Comments Email Email

egtmedia59Although Flight Centre seems infallibly profitable, the fortunes of other travel-related companies are rather more volatile – especially at the moment.

In late February, three Australian travel retailers of different sorts released their results, with wildly differing outcomes. helloworld reported a major loss, Wotif.com saw its after-tax profits slide by 18% and Flight Centre did as Flight Centre always does – made a whopping amount of money and notched up yet another record profit. 250x250

This week, however, the Australian Financial Review’s Street Talk column noted that Wotif.com shares closed 23% higher at AUD 3 as the market reacted well on Wednesday to the sale of a large portion of Hyperion Asset Management’s stake.

Street Talk understood that Credit Suisse assisted in placing a line of 7.5 million of Hyperion’s shares – or 3.5% of the company – at AUD 2.40 a share on Wednesday morning. In its last substantial holding notice, Hyperion owned 9% of the company.

Wotif shares have fallen by 45 per cent over the last year amid increased competition. In February, Wotif saw its first half after-tax profits fall by 18% to AUD 22.6 million, with the retailer blaming increased marketing and technology costs.

As Martin Kelly of Travel Trends noted at the time: “The underlying issue – the elephant in the room – is that Wotif sold 300,000 fewer room nights than the year before – 3.2 million compared with 3.5 million.”

Meanwhile, helloworld’s board is apparently less than delighted with the company’s recent performance and is casting a beady eye on operations. helloworld suffered a pre-tax loss of almost AUD 4 million in the six months to December, down from a AUD 15 million profit in the previous corresponding period.

The 126% decline was blamed on AUD 9.1 million in business implementation costs and AUD 5.4 million in costs connected with the sale of its inbound businesses to the Australian Outback Travel Group.

The helloworld board is reported to have called in an independent employment consultancy to conduct confidential interviews with helloworld’s leadership team to garner their frank views on the way the company is being run.

The style of management is under scrutiny, insiders report.

Written by : Peter Needham

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