December 17, 2009 / 3:50 PM / 9 years ago

UPDATE 2-Transat Q4 profit beats market, shares hit year-high

* Q4 adj EPS C$0.51 vs est. C$0.29

* Q4 revenue falls 9 pct

* Shares hit new yr-high (Recasts, adds details, analysts’ comments, updates share movement)

By Koustav Samanta and Amit Kumar

Dec 17 (Reuters) - Canadian holiday travel company Transat AT Inc TRZb.TO reported a fourth-quarter profit that handily beat estimates, helped by lower operating costs and higher margins, sending its shares up as much as 10 percent to a new 52-week high.

For the fourth quarter ended Oct. 31, the company reported a net income of C$18.1 million, or 52 Canadian cents a share, compared with a loss of C$82.4 million, or C$2.54 a share, a year earlier.

Excluding items, Transat earned 51 Canadian cents a share.

The company said its quarterly revenue fell 9 percent to C$719.7 million, mainly due to a fall in average sale prices and a 3.3 percent drop in the number of travelers.

Analysts on average expected earnings of 29 Canadian cents a share on revenue of C$774.4 million, according to Thomson Reuters I/B/E/S.

Genuity Capital Markets analyst David Tyerman, who has a “buy” rating on the stock, said the company benefitted from lower hotel rates and other input costs.

“The company seems to be focused on profitability quite intensively at this point ... perhaps more than in the past when they were more focused on market share. Because of the greater focus on profit they have reduced their cost structure,” Tyerman said.

Transat reported a margin of C$35.6 million, up 53 percent from C$23.2 million in the year-ago period.

“Our fourth-quarter volumes were similar to last year’s. But prices and especially costs were lower and we also achieved excellent load factors, which explains the higher margin,” Chief Executive Jean-Marc Eustache said.

Transat said reservations from Canada to sun destinations for 2010 winter were currently lower than last year, but that it had adjusted capacity in the first quarter to protect load factors.

Versant Partners analyst Cameron Doerksen said margins will improve this winter despite lower bookings as the company would benefit from lower input costs in a number of areas.

Shares of the Montreal-based company were up C$1.66 at C$19.25 in early afternoon trade Thursday on the Toronto Stock Exchange. They earlier touched a year-high of C$19.37. (Reporting by Koustav Samanta in Bangalore; Editing by Unnikrishnan Nair)

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