Al Tayyar Travel Group [1810.SE] posted KPIs for 1Q18, with net income of SAR86mn, dropping 37% Y-o-Y. Excluding the impact of impairment losses SAR17mn in 1Q18 (vs. none in 1Q17), net profit decreased by 24% Y-o-Y. Revenue was almost flat (+3% Y-o-Y to SAR86mn), weighed down by revenues from the core government business due to changes in terms with major clients. Online bookings for the group grew, however, 84% Y-o-Y to SAR370mn, while revenues from the hospitality division doubled and car rental sales increased 60% Y-o-Y. Gross margin contracted 70bps to 73.7% as the company trimmed margin for market share gains in some services, in addition to a change in product mix. Gross profit was almost flat (+2% Y-o-Y) at SAR355mn. Meanwhile, operating profit declined 20% Y-o-Y to SAR133mn, with EBIT margin contracting 8pp Y-o-Y to 27.6% as SG&A costs increased 20% Y-o-Y due to the growth in the online business and the start of commercial operation of hospitality assets in 4Q17.