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Ctrip.com Q4 Profit Down 24% On Higher Expenses, Despite Revenue Growth

Chinese travel services provider Ctrip.com International Ltd. (CTRP) reported Thursday a profit for the fourth quarter that decreased 24 percent from last year as strong revenue growth was more than offset by sharply lower operating margins amid higher operating expenses.

Looking ahead to the first quarter, the company forecast net revenue growth of about 15 percent to 20 percent from the prior-year period.

Ctrip.com International provides travel service of hotel accommodations, airline tickets, packaged tours and corporate travel management in China.

"We are pleased with the solid results in the fourth quarter and full year 2012. We remain focused on our strategy of offering our customers the best products with the best services at the best prices," President and CEO Min Fan said in a statement.

Shanghai-based Ctrip.com reported net income of RMB 192.55 million or $30.91 million for the fourth quarter, down 24 percent from RMB 252.52 million in the prior-year quarter. Earnings per ADS declined to RMB 1.38 or $0.22 from RMB 1.67 or $0.27 last year.

Excluding share-based compensation charges, net income for the quarter was RMB 306.29 million or $49 million, down 12 percent from RMB 347.24 million in the prior-year quarter. Earnings per ADS were RMB 2.17 or $0.35, compared to RMB 2.30 or $0.37 a year ago.

Total revenues for the quarter increased 18 percent to RMB 1.17 billion or $187.36 million from RMB 986.60 million in the same quarter last year.

Net revenues grew 19 percent to RMB 1.10 billion or $176.78 million from RMB 925.83 million in the prior-year quarter.

On average, eight analysts polled by Thomson Reuters expected the company to earn $0.11 per share for the quarter on revenues of $174.27 million. Analysts' estimates typically exclude special items.

Ctrip.com's hotel reservation revenues for the fourth quarter grew 17 percent to RMB 468.30 million or $75.17 million, primarily driven by a 36 percent increase in hotel reservation volume, partly offset by a 14 percent decrease in commission per room night amid promotional activities.

Air ticket booking revenues rose 18 percent to RMB 447.19 million or $71.78 million, reflecting an increase in air tickets sales volume.

Packaged-tour revenues increased 27 percent to RMB 165.72 million or $26.69 million, due to the increase of leisure travel volume. Corporate travel revenues grew 22 percent to RMB 57.53 million or $9.23 million, driven by the increased corporate travel demand from business activities.

Operating margins for the quarter contracted 14 percentage points to 11 percent, as gross margin contracted 2 percentage points and operating expenses as a percentage of revenues soared 12 percentage points amid 53 percent surge in product development expenses, and 52 percent rise in sales and marketing expenses.

For fiscal 2012, the company reported net income of RMB 714.41 million or $114.67 million, down 34 percent from RMB 1.07 billion in the prior year. Earnings per ADS declined to RMB 4.98 or $0.80 from RMB 7.08 or $1.12 last year.

Excluding share-based compensation charges, net income for the year was RMB 1.15 billion or $184 million, down 19 percent from RMB 1.42 billion in the year ago. Earnings per ADS were RMB 7.97 or $1.28, compared to RMB 9.33 or $1.48 last year.

Total revenues for the year increased 18 percent to RMB 4.41 billion or $707.72 million from RMB 3.73 billion last year. Net revenues grew 19 percent to RMB 4.16 billion or $667.53 million from RMB 3.50 billion in the prior year.

Street was looking for full-year 2012 earnings of $0.68 per share on annual revenues of $666.01 million.

Looking ahead to the first quarter, Ctrip.com forecasts net revenue growth of about 15 to 20 percent from the prior-year quarter. Analysts expect the company to report revenues of $171.63 million.

"We will continue to invest in our customer services, product offering, brand recognition and technology development. Ctrip is well positioned to capture the fast growing opportunity in China travel market in the future," Fan added.

CTRP closed Thursday's regular trading session at $19.81, down $0.18 or 0.90% on a volume of 3.40 million shares. However, the stock gained $0.63 or $3.18% in after-hours trading.

by RTT Staff Writer

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