MONTREAL -- Transat A.T. Inc. beat analyst forecasts even though the tour operator ended its 2014 financial year with a reduced summer season profit.
The company's net income decreased 44 per cent $30.6 million in the fourth quarter largely due to hedging contracts that protect the company from the volatility of fuel prices.
Excluding this and restructuring charges, Transat's adjusted earnings dropped to $49.4 million or $1.27 per diluted share from $54.8 million or $1.40 per share in the fourth quarter of 2013.
The Montreal-based leisure travel company said it carried 5.4 per cent more travellers and received higher prices during the quarter but its profit was reduced by the Canadian dollar's decline against other currencies and increased capacity on transatlantic routes.
"In spite of a 10 per cent increase in supply on our European routes, our numbers for the summer are among our best," said Jean-Marc Eustache, Transat's president and chief executive officer.
"In the entire history of the company, we've done better only once, last year, which was a record. We delivered on all fronts, including costs, product, marketing, yield management, and the outcome is a very satisfying summer season."
Revenue for the company's fiscal fourth quarter was $844.7 million, up 4.5 per cent from $808.6 million in the comparable period of 2013.
Transat's North American operations earned $55.5 million in adjusted operating income (EBITDA), down nearly 20 per cent from the prior year largely due to the substantial increase in competition on transatlantic routes, along with the impact of a lower loonie. Revenues increased by five per cent or $28.8 million.
The European segment's EBITDA increased to $17.4 million from $11.5 million a year earlier as revenues grew on a 15 per cent increase in the numbers of travellers mainly in the medium-haul market.
Benoit Poirier of Desjardins Capital Markets said the quarterly adjusted profits were well above his estimate of 99 cents per share, primarily due to much higher number of travellers that boosted revenues.
For the full-year, Transat's net income fell to $22.87 million or 59 cents per diluted share, from $57.95 million or $1.51 per share in 2013. Excluding one-time items, adjusted profits were off nearly 28 per cent to $45.24 million or $1.16 per share. That compared to $62.56 million or $1.63 per share in the prior year.
Revenues increased to $3.75 billion from $3.65 billion in 2013.
Transat expects to face tough competition this coming winter due to a 10 per cent increase in industry capacity and the weakening Canadian dollar. The company is decreasing its winter capacity by six per cent, but is seeing prices increase 1.4 per cent so far from the 41 per cent of capacity that has been sold.
On the Toronto Stock Exchange, Transat's shares gained 38 cents or 4.14 per cent at $9.55 in Thursday morning trading.
