The Helloworld Travel Ltd (ASX: HLO) share price is one to watch after the Aussie travel company reported its unaudited full-year results.
Why is the Helloworld share price on watch?
The Aussie travel group reported underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $44.0 million. That’s compared to positive $73.5 million in the prior corresponding period.
Underlying profit before tax of $17.1 million resulted in a $70.0 million statutory loss after one-off costs and non-cash impairments. That was a sharp downgrade on FY19 figures, which saw Helloworld report a $50.8 million underlying profit before tax.
The coronavirus pandemic has hit the travel industry hard and that was reflected in the unaudited earnings result.
The Helloworld share price has fallen 60.1% in 2020 and was already under pressure before the pandemic.
Government stimulus including JobKeeper has helped maintain business operations despite the challenges in 2020.
The group also completed a $50.0 million equity raising in August, which has boosted liquidity and extended Helloworld’s runway beyond 2022.
Helloworld’s cash balance of $131.9 million as at 30 June 2020 increased to $174.8 million at 28 August thanks to the capital raising.
The travel company has now completed its New Zealand operational restructuring. However, Helloworld declined to provide FY21 guidance given the current uncertainty.
State and federal government restrictions have shut borders and restricted travel both domestically and overseas.
Positively, 90% of outstanding refunds have now been processed with 60% now received and paid out. Helloworld has paid out refunds of over $800 million across its corporate, wholesale and ticketing businesses in Australia and New Zealand.
The focus in FY20 has shifted to minimising cash burn and slashing costs. Helloworld reported its costs were now “under control” with short-term net operating cash outflows tightly managed since April 2020.
Foolish takeaway
The Helloworld share price is one to watch following the unaudited results. That’s especially the case given the current volatility in ASX travel shares.
It’s been a tough year for the Aussie travel agent but tighter cost controls and strong government support are positive for its short-term operations.
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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Helloworld Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The post Helloworld share price on watch as profit slumps appeared first on Motley Fool Australia.
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