Wanderlust, dollar help Webjet earnings take off

THE online travel booking service Webjet has posted a 17 per cent rise in half-year profits as it benefits from Australians taking advantage of cheap fares and a strong dollar to travel overseas in record numbers.

By InvestSMART · 9 Feb 2012

By InvestSMART ·
9 Feb 2012

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Shares in Webjet surged 4 per cent to a 13-month high of $2.68 yesterday after the Melbourne company reported an after-tax profit of $5.9 million for the six months to the end of December, compared with $5 million a year earlier. Revenue rose 35 per cent to $29 million for the first half.

Webjet's managing director, John Guscic, said international air fares continued to fall, making it cheaper for more people to travel overseas to a broad ranges of destinations.

Mr Guscic said Webjet was noticing a growing trend of people travelling on short-haul trips to Asia rather than flying to long-haul destinations.

"We are seeing a strong push to short-haul Asian destinations. We are growing all international destinations but with a skew towards Asia," he told investors yesterday.

Figures from the Bureau of Statistics released this week show the number of Australians travelling abroad last year rose to 7.8 million.

The online travel company said the main drivers of the lift in earnings were a 29 per cent increase in total transaction value - the price at which travel products and services were sold - to $369 million and a boost in margins, which rose to 7.9 per cent for the half, from 7.6 per cent.

Webjet also said bookings over iPhones had increased eight-fold in the half, demonstrating the need for the company to stay relevant to consumers as technology changed.

"We are seeing people who are coming to us through a plethora of devices," Mr Guscic said.

Webjet stuck to earlier guidance of at least a 10 per cent rise in profits for the full year. Last financial year it posted a net profit of $11 million.

It will pay a fully franked interim dividend of 6? a share on April 12.

The strong earnings from Webjet bodes well for other travel-related stocks such as Flight Centre, whose shares rose 18? to $19.93 yesterday. However, Wotif.com fell 1? to $4.02.

AT A GLANCE

First half 2012 2011

Revenue $29m $22m

Net profit $6m $5m

EPS 8.16? 6.63?

Dividend 6? 5.5?

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Frequently Asked Questions about this Article…

What were Webjet's half‑year earnings and revenue results?

Webjet reported a 17% rise in half‑year after‑tax profit to $5.9 million for the six months to December, with revenue up 35% to $29 million. Earnings per share increased to about 8.16 cents from 6.63 cents in the prior period.

What drove Webjet's earnings growth this half?

Webjet cited cheaper international air fares, a strong Australian dollar and higher sales volume as key drivers. Total transaction value rose 29% to $369 million and margins improved to 7.9% (from 7.6%), which together lifted profitability.

How is mobile and technology affecting Webjet bookings?

Webjet saw bookings via iPhones increase eight‑fold in the half, and noted customers are arriving via a 'plethora of devices.' The company says staying relevant to changing technology is important to capture this mobile demand.

What travel patterns did Webjet management highlight for investors?

Webjet's managing director, John Guscic, said there is a clear skew toward short‑haul Asian destinations rather than long‑haul travel. The company is growing across international destinations overall, supported by more Australians travelling abroad (about 7.8 million last year).

What guidance did Webjet give for the full financial year?

Webjet stuck to its earlier guidance of at least a 10% rise in profits for the full year. For context, the company reported a net profit of $11 million in the previous financial year.

Did Webjet declare a dividend and when will it be paid?

Yes. Webjet will pay a fully‑franked interim dividend of 6 cents a share, scheduled for payment on April 12, as reported in the results.

How did Webjet's strong results affect other travel stocks on the market?

The strong earnings news helped lift travel sector sentiment: Flight Centre's shares rose 18% to $19.93, while Wotif.com shares fell about 1% to $4.02, showing mixed reactions across travel‑related stocks.

What key metrics should everyday investors watch in future Webjet updates?

Based on the report, investors should monitor Webjet's total transaction value, margin trends, mobile booking growth, international fare conditions (which affect demand), and whether management continues to meet its profit guidance.