Ctrip Q3 net profit drops 40%: Price war causes market cost to increase greatly

"Http://www.aliyun.com/zixun/aggregation/6149.html" >techweb reported November 6 news, Ctrip released this morning in the third quarter of 2012 earnings report, The report showed net profit of 31 million U.S. dollars, down 40% year-on-year, the reason is that the start of the July online tourism price war led to Ctrip three quarterly sales and market costs increased by 74%.

Earnings showed that the third quarter of 2012, Ctrip's operating income of 87 million U.S. dollars, an increase of 20%, gross profit margin with the same period last year, the gross margin of 76%, the same period last year 77%, the last quarter is 75%.

However, operating costs rose sharply, with sales and marketing costs rising 74% to 48 million dollars year-on-year, mainly because of increased marketing activity.

This July, Ctrip announced a high-profile 500 million-dollar promotional budget authorization, online tourism industry price station opened the curtain. Ctrip has launched a hotel, air tickets and holiday products discount or return, and shout out "monthly crazy reduction, every day low price" slogan, this is the first 12 years of Ctrip to carry out large-scale promotional. Ctrip's CEO, fan, said the price war would continue, playing for a year or even three years.

Financial results show that the price war has led to a substantial increase in ctrip market costs, from the second quarter of 2011 to date, Ctrip's growth rate of 33%, 39%, 45%, 47%, 54%, 74%, significantly higher than net revenue growth.

The increase in costs led to a contraction in profits, in the third quarter of 2012, the net profit of the ownership of Ctrip was 31 million U.S. dollars, down 40% year-on-year, down 62%. With Cheng has made it clear that the price war will continue, the cost of Ctrip is expected to continue to maintain a high level, net profit will continue to decline. (Zengzuo)