About 50% Below Market Forecast
Weak Performance in Duty-Free Sector Affects Results
Hotel Shilla recorded an operating profit in the first quarter of this year that fell short of market expectations. It is analyzed that the sharp decline in duty-free (TR) operating profit pulled down the overall operating profit.
Hotel Shilla announced on the 30th that its consolidated operating profit for the first quarter of this year was preliminarily estimated at 12.1 billion KRW, a 65% decrease compared to the same period last year. According to FnGuide, the consensus estimate for Hotel Shilla's first-quarter operating profit was 24.6 billion KRW.
Sales recorded 980.8 billion KRW, exceeding market expectations. This figure represents a 30% increase compared to the same period last year and surpasses the market forecast of 933.4 billion KRW by 5%.
The decline in operating profit was largely due to the poor performance of the duty-free business. Although duty-free sales in the first quarter increased by 37% year-on-year to 830.7 billion KRW, operating profit dropped sharply by 77% to 5.9 billion KRW. The hotel and leisure division's sales rose 5% from last year to 150.1 billion KRW, while operating profit decreased by 33% to 6.2 billion KRW. The operating profit margin fell by 3.4 percentage points from 4.6% to 1.2%.
The company stated, "Despite the first quarter being the off-season for the hotel division, sales are growing," and added, "Stay has also consistently achieved good results." Furthermore, they said, "Although the recovery is still slow, the overall tourism industry normalization trend continues," and "We will focus on solid management while quickly responding to changes in the market environment."
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