All eyes will be on the Webjet Limited (ASX: WEB) share price this morning following the release of the online travel agent's half year results.
How did Webjet perform in the first half?
For the six months ended December 31, Webjet reported a 25% increase in total transaction value (TTV) to $2,334 million. The key driver of this growth was its rapidly growing WebBeds business. It reported a 42% increase in TTV to $1,470 million. This was supported by a 7% increase in Online Republic TTV to $156 million and a modest 1% lift in Webjet OTA TTV to $708 million.
This led to Webjet posting half year revenue of $217.8 million, which was an increase of 24% on the prior corresponding period.
Thanks to a sizeable 523 basis points increase in its underlying EBITDA margin, underlying EBITDA came in 43% higher than a year earlier at $86.3 million. This underlying result excludes the write off of $44 million in unpaid receivables following the collapse of Thomas Cook. Including this one-off, statutory EBITDA would have been down 14% to $46.4 million.
On the bottom line, underlying net profit after tax (before acquisition amortisation) jumped 44% to $55.1 million and earnings per share rose 29% to 40.7 cents. This, combined with its strong cash flows and robust balance sheet, allowed the board to declare a fully franked interim dividend of 9 cents per share. This was an increase from 8.5 cents per share a year earlier.
Webjet's managing director, John Guscic, was pleased with the half and the progress it is making towards its targets.
He said: "We are delighted to have produced another record half year, with NPAT (before AA) up 44% to $55.1 million on TTV of $2.3 billion. We continue to grow strongly and are tracking ahead of plan to deliver our "8/4/4" (1) profitability target."
Outlook.
Looking ahead, Mr Guscic warned that the coronavirus outbreak will have an impact on its business in the second half.
He said: "Based on our 1H20 performance and TTV growth in January 2020, we would have been upgrading our previous FY20 EBITDA guidance. However, we are seeing an impact on bookings and TTV across all our businesses as a result of the current COVID-19 outbreak which will impact 2H20 EBITDA."
Mr Guscic advised that the WebBeds business has experienced a material slowdown in China, as well as some impact in the APAC, Europe and AMEA regions. Webjet OTA's package tours business, which has a high reliance on China product offerings, has also experienced slowing demand. And finally Online Republic's Motorhomes and Cruise divisions have been impacted.
The chief executive officer warned that it is very challenging to predict with certainty the expected impact on its results. At this stage, the company's best estimate is a reduction in second half EBITDA of between $7 million to $15 million.
As a result, Webjet's s FY 2020 EBITDA guidance is now expected to be between $147 million to $165 million. This represents an increase of 14% to 28% over FY 2019's EBITDA. This compares to its AGM guidance of $157 million to $167 million.
