Kinki Nippon Tourist Co. said Thursday its group net profit grew 4.8 percent to 2.45 billion yen last year thanks to cost cuts and a rebound in overseas travel.

But the nation’s second-largest travel agency, which has been struggling since Sept. 11, 2001, warned that the business impact from any military strike on Iraq is unfathomable. Given the uncertainty, the firm’s projected 2003 group profit of 2 billion yen, on revenue of 117 billion yen, does not reflect the possibility of war on Iraq.

For 2002, the company reported a consolidated operating profit of 3.5 billion yen, up from 43 million yen the previous year. The group operating revenue dropped 3.6 percent to 114.95 billion yen. Its cost-cutting efforts saved 7.7 billion yen, including a 2.4 billion yen reduction in personnel expenses.

Overseas travel recovered in some areas, especially to Oceania and China, but trips to the continental U.S. declined 30.5 percent from the previous year. Domestic travel sales dropped 4.9 percent on a parent-only basis, due to the decline in corporate group tours. The firm attributed the decline to an increase in direct ticket sales by railways and airlines.

The firm expects revenue from overseas travel to grow 4.5 percent on a parent-only basis for the current year but is worried about any impact from military action in Iraq.

“As demonstrated by the Sept. 11 attacks, (the impact of war) is hard to estimate,” Kinki Vice President Koichi Yoshida said. “Even if we anticipate contingencies, we cannot narrow them down to specific numbers.”

War fears have already been evident, Yoshida said, as schools and businesses have begun to cancel overseas trips, and “in the last 10 days, our call centers are seeing a drop in ad responses.”

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