February 5, 2015 / 11:44 PM / in 3 years

RPT-UPDATE 1-Expedia 4th-qtr profit misses estimates, shares slide

(Repeats to fix first reference to CFO)

By Jeffrey Dastin

Feb 5 (Reuters) - Expedia Inc on Thursday posted a fourth-quarter profit below analysts’ expectations and over 30 percent lower than the same quarter a year ago, due in part to currency headwinds and heavy competition in China.

The travel services company’s shares slid more than 7 percent in extended trading.

Expedia, which recently slipped behind The Priceline Group Inc to become the world’s second largest travel services company by bookings, earned about $66.0 million last quarter, or 50 cents per diluted share.

However, analysts had on average estimated the company would earn $1.01 per share in the quarter, according to Thomson Reuters I/B/E/S.

While Expedia has expanded rapidly with the acquisitions of Travelocity last month and the Wotif Group in November 2014, the company said it will take time to integrate Wotif, in particular, and will not realize its full potential until after the first half of 2015, when Expedia technology will power all of its business.

“We’re now on cutting-edge technology platforms that will enable us to really expand our global presence,” Chief Financial Officer Mark Okerstrom said.

Meanwhile, its Chinese subsidiary eLong continued to suffer from heavy competition in the region, while demand from European travelers and others visiting the United States has slumped due to a stronger dollar.

“We are expecting a deceleration in revenue growth in 2015 (from these) headwinds,” Okerstrom said during the company’s earnings call, adding in an interview: “We are seeing impacts in most regions that have had foreign exchange weakening.”

To be sure, a stronger U.S. dollar and lower fuel prices have helped boost demand from U.S. consumers, Chief Executive Officer Dara Khosrowshahi said during the earnings call. More than 50 percent of Expedia’s revenue is generated from the United States.

Volatile foreign exchange rates reduced Expedia’s cash and equivalents by $79.4 million last quarter, the company reported. Its currency hedging cost it more than $5 million, and the eLong business saw a $27 million loss in adjusted earnings before interest, tax, depreciation and amortization (EBITDA).

Excluding eLong but including a negative foreign exchange impact of 5 percent, the company said it expects its EBITDA to grow between 10 percent and 15 percent in 2015.

Gross bookings in the fourth quarter grew 24 percent year-over-year.

Expedia also said it will pay shareholders an 18-cent dividend on March 26, worth about $23 million. (Reporting by Jeffrey Dastin; editing by Meredith Mazzilli, G Crosse)

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