Trip.com projects 50% drop in Q1 revenue

Due to the outbreak of the novel coronavirus starting at the beginning of the year, China's largest online travel agency Trip.com expects its net revenue for the first quarter of 2020 to fall by about 45 percent to 50 percent from a year earlier, said the company in its full year 2019 financial results released on Thursday.

James Liang, executive chairman and co-founder of the tourism industry leader, said they are still confident in the opportunities globally, which is very much based on the underlying fundamentals of the Chinese economy.

Trip.com has taken immediate actions to help its partners go through the downturn, including a 1 billion yuan ($142 million) fund which was rolled out on Mar 5 to relieve the cash flow burden of its suppliers.

Up to this date, more than 10 million orders have been canceled on the platform of Trip.com, resulting in a total refund of over 31 billion yuan. Despite the temporary slowdown, Liang said the company's growth will be quite noticeable once the outbreak is contained.

Over the past two months, the Nasdaq-listed Trip.com has seen its price shed more than 40 percent. Its price dropped 6.36 percent to close at $21.63 per share on Wednesday, while Nasdaq fell 4.7 percent to close at 6989.84 points.

Latest fiscal results show that the value of cash, cash equivalent, short-term investment balance, hold-to-maturity securities and long-term wealth management balance totaled at 59.9 billion yuan, which the company said was enough to confront the current headwinds.

According to the recent financial report, income from operations for the fourth quarter of 2019 came at 580 million yuan, compared to the loss of 189 million yuan in the same period in 2018. Net income attributable to Trip.com group's shareholders reached 2.0 billion yuan in the fourth quarter of 2019, resulting in 2019 full year net income of 7.0 billion yuan. The net income of 2018 was 1.1 billion yuan.

"We achieved strong results in the fourth quarter, despite facing macro challenges in certain regions," said Jane Sun, chief executive officer of Trip.com. "The team delivered solid execution, driving both topline growth and bottom line profitability. Our business fundamentals have never been healthier than today, with both international expansion and lower-tier city penetration becoming increasingly important drivers in our future growth road map."