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02 Apr 2019 | 10:17

Hostelworld profits slump as booking growth hurt by weak supporting brands performance

Hostelworld reported a fall in annual profits as booking growth was weighed down by a decline in supporting brands, though the company said trading in the first quarter was in line with its expectations.

In 2018, profit before tax fell to €6.65m from €11.83m a year earlier and revenue decreased to €82.1m from €86.7m amid the impact from deferred revenue.

The company said that €2.9m of revenue generated from free cancellation bookings had been deferred and would be recognised, net of any future cancellations, in future periods.

'Gross bookings for the year were flat given the managed decline in our supporting brands which offset the growth of 4% in the Hostelworld brand, the company said. The group's supporting brands reported a by 47% decline in growth for the year. Average booking value, the average value paid by a customer for a gross booking, increased 3% to €11.89. Adjusted earnings (EBITDA) fell 19% to €21.4m

The company recommended a full year final dividend of 9.0 euro cent per share which together with the interim dividend of 4.8 euro cent per share brings the total dividend for 2018 to 13.8 euro cent.

'We started work on a number of initiatives during the second half of 2018 and we look to 2019 as a year of investment to fund the growth drivers for 2020 and beyond. We anticipate that organic growth will be self-funded from our existing cash resources and cash generated from the business,' the company said.

'Trading in the first quarter of 2019 is in line with the Board's expectations. We remain committed to delivering value to shareholders and continue to assess our capital allocation approach in line with investment choices and priorities,'  it added.

10:17am: (LON:HSW) Hostelworld Group Plc share price was +10.7p at 193.3p

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