Redcap Tour Reports Operating Profit of 7.7 Billion KRW in 1Q, Up 8.8% YoY

[Asia Economy Reporter Park Hyungsoo] Despite overseas travel not yet resuming due to the impact of COVID-19, Redcap Tour's first-quarter performance improved compared to the same period last year.

Redcap Tour announced on the 22nd that it achieved consolidated sales of 63.6 billion KRW and operating profit of 7.7 billion KRW in the first quarter. These represent increases of 6.2% and 8.8%, respectively, compared to the same period last year. Ordinary profit rose by 10.5%, and net profit increased by 9.8%.

Revenue from the rental car business reached 61 billion KRW, up 15.4% year-on-year, and operating profit increased by 18.5% to 9.3 billion KRW. Both vehicle rental sales and sales from used vehicle disposals increased due to growth in long-term rental contracts and used car sales.

Sales from the travel business were 2.5 billion KRW, down 63.7% compared to the same period last year. Operating loss was 1.5 billion KRW, widening the deficit compared to the previous year. Business trip demand declined due to the impact of COVID-19. While the first quarter of last year was affected by COVID-19 starting mid-February, this year the impact lasted throughout the entire three months.

A positive factor was that the operating loss in the travel business, which had been increasing quarterly last year, decreased for the first time in the first quarter of this year. Cost reduction was possible through phased emergency management measures. Improvement in performance is expected in the travel business sector, which recorded a total operating loss of 11.9 billion KRW last year.

Currently, Redcap Tour is focusing on expanding its rental car business and preparing the travel business for the post-COVID-19 era.

Since entering the vehicle subscription service market last year in partnership with Hyundai Motor Group, the rental car business has been expanding related services. New business models suitable for the rapidly changing mobility ecosystem are also being prepared.

Eco-friendly services aligned with the electric vehicle era and collaboration projects to diversify customer touchpoints will also be introduced. Earlier this year, Redcappers, a content creator group composed of YouTubers and bloggers, was launched. They propose new lifestyles centered on people, cars, and travel.

Although the timing of the resumption of overseas travel remains uncertain, the travel business is increasing contracts with dedicated business travel agencies by expanding the distribution of its proprietary universal business trip management solution BTMS 4.0 and the real-time flight and hotel reservation system OBT. Large-scale performance improvements are expected once COVID-19 eases.

The MICE sector is still facing difficulties with overseas events, but domestic events and web symposiums are active. The subsidiary Redcap MICE, specializing in M&E (Meeting & Event) business, turned profitable in the first quarter. Encouragingly, inquiries about offline events continue into the second half of this year.