Second Quarter will have slower growth, says Priceline
On Thursday, the Priceline Group reported that its first-quarter profit was up just slightly compared to a year ago period. The company said that it is expecting slow growth in the second quarter as weak foreign currencies relative to the US dollar will have a major impact on its sales. Shares of the company have dropped 3.3% in morning trading to $1,222.
Priceline Group is the world's largest online travel services company and is owner of its namesake website, as well as Booking.com and others.
It said that first-quarter net income has grown less than 1% from a year earlier to $333 million, or $6.36 per diluted share. Leaving aside certain items, the company has earned $8.12 per diluted share.
According to Thomson Reuters I/B/E/S analysts expected the company to earn $7.72 per share. Revenue in the quarter was around $1.84 billion, against analysts' expectations for $1.8 billion.
The company mentioned that it is expecting that travel bookings in the second quarter will stay flat or will show up to 7% growth from a year earlier, because the sales in foreign currencies translate into fewer US dollars, ‘significantly’ slowing its pace of growth.
S&P Capital IQ analyst Tuna Amobi, said, “Foreign exchange had more of a negative impact that we thought and doesn't show any signs of easing up”.
Priceline Group's forecast has assumed that the euro is 19% weaker and the British pound is 11% weaker than a year ago. The company said that accounting for these fluctuations, travel bookings would be up 15 to 22%.
In the second quarter, the company is expecting to earn between $10.95 and $11.75 per share, excluding certain items, with revenue staying flat or rising up to 7% in comparison to a year earlier.
The company has greater exposure to foreign exchange volatility as compared to the rival Expedia Inc, with international bookings representing 88% percent of its total travel sales in the first quarter, in comparison to 41% for Expedia.
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