Hana Tour posted second-quarter results that fell short of market expectations this year, weighed down by high exchange rates and rising fuel surcharges. Geopolitical instability originating in the Middle East simultaneously pressured the exchange rate and oil prices, weakening travel demand more than expected.
Hana Tour said in a regulatory filing on the 5th that its second-quarter operating profit, on a consolidated basis, was preliminarily tallied at 5.44 billion won, a 43.6% decrease from a year earlier. The figure fell below the average of brokerage forecasts (5.8 billion won) compiled by financial information provider FnGuide.
Revenue during the same period fell 3.8% to 115.435 billion won. This also came in about 5% below the consensus (121.8 billion won). Net profit fell 36.8% to 7.051 billion won.
Cumulative first-half revenue was 290.264 billion won and cumulative operating profit was 22.203 billion won, up 0.7% and 1.2% respectively from a year earlier, maintaining modest growth.
Hana Tour's second-quarter earnings decline had been somewhat anticipated, as the U.S.-Iran conflict in June sent international oil prices higher and rattled the exchange rate. The international fuel surcharge, which is linked to oil prices, rose to level 33 in May, pushing up overseas travel costs. This particularly hurt long-haul routes such as Europe and the Americas, which carry larger margins. As travel demand shifted toward relatively cheaper short-haul destinations such as Japan and China, profitability declined before the top line, according to analysts on the securities market.
Brokerages accordingly lowered their earnings estimates for Hana Tour successively over the past three months. The consensus for Hana Tour's second-quarter operating profit, which stood at 8.8 billion won in May, was adjusted to 7.7 billion won in June and 5.8 billion won last month.
However, hopes for a rebound in the second half remain alive. The international fuel surcharge for July fell sharply to level 19 from June's level 27, and with oil prices stabilizing, forecasts suggest travel demand will gradually recover starting from the summer vacation season.
