Al Tayyar Travel, one of Saudi Arabia’s biggest travel agencies, yesterday reported a sharp fall in its third-quarter profit amid a spending squeeze across the kingdom.
The company’s net profit shrank by 29 per cent to 188 million riyals (Dh184m) versus the year-earlier figure of 265m riyals.
Revenue slipped by 4 per cent to 1.8 billion riyals from the year-earlier 1.9bn riyals.
In a statement to the Tadawul stock exchange, Al Tayyar said that tighter spending was felt in the quarter, “especially in the government sector”.
The company said its margins had tightened as it worked “to protect and increase its market share”.
It did note an increase in online sales, up by a factor of more than 10, to 144m riyals from the year-earlier 13m riyals.
Through yesterday, Al Tayyar Travel shares were down 65.95 per cent for the year to date, versus 20.9 per cent for the Tadawul index as a whole.
The slump in Al Tayyar stock coincides with the tightened spending in the kingdom because of the two-year drop in the oil price.
“We expect air travel demand in Saudi Arabia to continue facing challenges next year driven by government spending cuts, salary cuts and job losses amid low oil prices,” said Rashid Aboobacker, the associate director at TRI Consulting, a consultancy in Dubai. “These factors will certainly have a knock-on effect on both corporate and personal and leisure travel expenditure levels in the country.”
The company was founded in 1980 by Nasser bin Aqeel Al Tayyar, who remains a board member even though he stepped down from his role as managing director last year.
The billionaire has been in the travel business most of his life, according to a 2013 Bloomberg profile.
* with additional reporting from Sananda Sahoo
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