Webjet has unsurprisingly delivered some nasty results, reporting a 90% plunge in revenue for the first half due to ongoing travel restrictions.
Despite a 52% reduction on costs, this resulted in first half EBITDA dropping from $87m in H1 2020 to -$40m this half.
It's not all bad news though.
The domestic online travel agency business has returned to profitability and has also taken market share as other competitors have hit the wall. Average monthly booking here are now at about 40% of pre-covid levels, doubling between Oct and Dec 2020.
WebBeds and Online Republic are showing small improvements, but remain well below pre-covid levels (at 12% and 25%, respectively).
Fortunately, the business is very well capitalised, and is managing cash flows well. Webjet is reporting a monthly cash burn of $4.8m against $283m in cash at the bank. The group's bank waivers have been further extended through to March 2022.
Webjet has also been busy improving cost efficencies, something that they think will be 20% improved at scale.
With vaccine rollouts now well underway the future is a little more certain. And it's encouraging to see lots of pent-up travel demand.
I think it will likely be at least until 2023 before the travel market is completely back to normal (barring any unexpected surprises). But at that time Webject will find itself a much leaner business with less competition.
Shares are probably attractive for those with the patience to look beyond the current difficulties.
Webjet has delivered a very impressive result, and the market has reacted accordingly.
Revenue rose 33% to $175m and NPAT up 61% to over $38m. On a per share basis, profit was up 48%.
Total Transaction volumes grew 29% and the oprating margin was over 2% stronger.
Recent acquisitions certainly helped a lot, but even if you exclude these organic revenue growth was over 20%.
It was WebBeds (the groups B2B segment) that did the heavy lifting and is the world's second largest player in this space and accounts for over half of Webjets operating profit.
It is this area that holds the biggest potential for furthert growth. Indeed, the traditional Customer facing business saw a decline in profit, no doubt a further signal of domestic economic weakness. That's to be expected for a cyclical operation, and I don't read that as anything structural.
Personally, I find it difficult to wrap my head around the accounts -- there's a lot of moving parts and past acquisitions muddy the waters. But it's hard to argue with the top line performance.
Although I don't own, and havent recommended on Strawman, it's great to see the community rank this highly and am glad it's in the Strawman index.
You can find some great coverage over at Ethical Equities here
ASX announcement is here
