Cox & Kings is cautiously optimistic about Europe business
Tour and travel firm Cox & Kings has posted a steady quarter. The numbers are muted as far as the profit figures are concerned. The Q1 consolidated net profit has dipped by about 24 per cent to Rs 108.07 crore for the first quarter ended June 30, 2016-17. The consolidated total income from operations has also declined to Rs 2,065.12 crore for the first quarter of the current fiscal as against Rs 2,131.80 crore for the same period of 2015-16. Margins have contracted slightly, but have held steady at about 15.3 per cent. BTVI’s Deepanshu Bhandari and Hiral Desai speak to Anil Khandelwal, CFO of Cox & Kings.
DEEPANSHU: Please run us through the highlights of the quarter. What has led to the slide in profits as well as some kind of contractions in top line?
ANIL: If you see the continuing operations – both from an EBITDA perspective, net revenues perspective and profitability perspective – the company has actually demonstrated a growth of around 9-10 per cent. The figures which you see in the quarterly results are actually also including the operations which we had in the Q1 of FY 16 which had the super-break results which was sold off last year in March. And hence the results are not comparable to that extent. But if I just take the like to like comparison both from an EBITDA perspective and net revenues perspective the improvement has been around 10 per cent.
HIRAL: In terms a sequential basis, we did see a loss in terms of how the Q4 goes. However, on a quarter and quarter basis, yes it has been a major improvement in terms of numbers. Do you expect this kind of performance will continue on a sequential basis?
ANIL: Q1 has been a relatively stronger quarter for us both from the India business perspective as well as the education business as well the hybrid hotel business. Both from the education business and hybrid hotels business perspective, you are aware that these businesses are predominantly in the UK and European region. So despite the factors which have been affecting the growth in European markets, we have been able to demonstrate a very steady set of performance both in education business as well as hybrid hotel business which from a constant currency growth has seen an increase of around 6 to 8 per cent. We are relatively cautiously optimistic about these two businesses. Barring the unforeseen external events – which are completely within outside of our preview – we definitely expect this performance to improve in the coming quarters as well as in the coming years.
DEEPANSHU: On the European business, how is the effect of Brexit likely to pan out for you? Are you seeing any kind of immediate impact of that right now?
ANIL: I think from aperspective of Brexit, if you see the data which is coming from the UK markets specially in the last recent months, the consumer confidence is back, the spending has returned. Yes I would say that Brexit from a decision making perspective as far as any consumption is concerned in Q1 which was fairly muted and that is also demonstrated from the international lazer business of ours where consumers actually postponed trivial decisions. But I think the consumer confidence is back. Brexit as you aware of obviously is yet to happen. It is not really a phenomena which is going to pan out in the couple of months. I think it is going to be a one year to two year phenomena. A lot of it remains to be seen as far as the impact of consumer confidence is concerned. But going by the trend of bookings and going by the order book position which we have specially in the education business, we would fairly remain cautiously optimistic in the business.