Wilderness Holdings predicted that tough market conditions will continue in the medium term with bed night demand battered as traditional markets in the U.S and Europe remain affected by the credit crunch.
Unfavourable exchange rates, rising costs and recession in source markets remain some of the challenges for company that operates across the SADC countries.
Andy Payne, Chief Executive Officer of the Botswana Stock Exchange (BSE) and JSE listed company, said down ward pressure on yield was managed well while the business real grew in bed night sales.
“We do not expect much change in some markets. Our source markets (US and Europe) are in a precarious economic situation,” Payne pointed out at the group’s results presentation.
However, there is a positive economic outlook in the U.S, but recovery is slow in European market.
Botswana operations, which include the luxurious Mombo and Chitabe camps in The Okavango Delta, saw its bed night rising 8 percent while Namibia, which largely relies on the European market, went down 18 percent.
South Africa, on the other hand, was down 2 percent owing to the strengthening of the Rand, which made the product more expensive.
“The performance against comparatives should also be viewed in light of the negative impact resulting from the currency gains (Rand and Pula against the US dollar and the Rand against the Pula) and the depressed 2010 World Cup trading period,” added a statement accompanying the results.
Payne revealed that they will start marketing campaigns in Asia, including Singapore, to diversify their market segments at a time when pricing has become instrumental to win clientele.
“We would like to broaden the source market. Some markets are under pressure,” said Payne, adding that Wilderness is not planning rate increase although some of its competitors are more ‘expensive than us’.
The unaudited financial results for the six months ended 31 August 2010 showed the company managed to increase its turnover by P28 million from P546 million to P574 million.
Earnings before depreciation, armotisation and goodwill impairment (EBITDA) for the period stood at P99 million, which Payne said was in line with P100 million achieved in the prior period.
Operating costs went up 32 percent that was blamed on the strengthening of the Rand against the Pula, which accounted to P10 million of the increase.
The other cost emanated from the consolidation of two new businesses into the results for the first which caused fixed costs to increase by P6 million with other costs coming from staff expenses that went up by 7 percent and repairs and maintenance.
However, the costs were offset by P36 million accrued from the insurance claims on damaged aircraft and the Duba Plains transaction.
Operating profit was flat while net profit after tax is 32 percent down on the prior year.
The group also managed to generate P97 million in cash during the period with the net result of improving the net cash position from P64 million at March to P161 million at August 31.
The 26-year-old business is invested in 53 destinations and manages and markets a further 17 in seven Southern African countries.
It also operates specialist travel businesses in six countries as well as a fleet of 49 aircraft. It employs more than 2 700 people, most of whom come from remote rural communities.
Its other operations are in Namibia, Malawi, SeychellesÔÇöwhere it owns an island, South Africa, Zambia and Zimbabwe.