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Highlights
- Web Travel Group posts mixed half-year results following the B2C demerger.
- WebBeds sees growth in transaction value but faces margin challenges.
- Announces a $150m buy-back program alongside financial updates.
Web Travel Group (ASX:WEB) has delivered its financial results for the half-year ending 30 September 2024, marking its first reporting period following the demerger of its B2C businesses. The strategic move, finalized on the same date, positioned Web Travel as a focused player within the WebBeds B2B marketplace, aligning with trends seen in ASX consumer stocks emphasizing streamlined operations. Meanwhile, the newly separated Webjet Group took control of the B2C segments, including Webjet OTA and GoSee, capitalizing on consumer-facing opportunities in the digital travel sector.
The WebBeds division reported notable progress, with a 25% growth in total transaction value, reaching $2.59 billion, supported by a 23% increase in bookings across all regions. Revenue edged up by 1% to $170.4 million. However, the company faced a decline in transaction value margins, which fell from 8.1% to 6.6%. This contraction was attributed to changes in geographic and customer mix, greater reliance on lower-margin third-party suppliers, and higher customer incentive payments.
Operational expenses increased by 14%, driven by investments in technology and workforce expansion. These challenges contributed to an 11% decrease in underlying EBITDA, which settled at $70 million. Despite these hurdles, net profit after tax (NPAT) from continuing operations rose by 6% to $37.5 million. When gains from the demerger and discontinued operations were included, total NPAT surged significantly, reaching $228.1 million.
Web Travel’s financial position remains strong, with $510 million in cash as of 30 September, even after a $120 million reduction related to demerger allocations and investments.
In a significant announcement accompanying the results, the company revealed a $150 million share buy-back program. This initiative is aimed at enhancing shareholder value and mitigating dilution risks associated with convertible notes.
Managing Director John Guscic acknowledged challenges during the period, such as the collapse of FTI Group, disruptions from the Paris Olympics, and the European football championships, which impacted transaction value margins. Despite these issues, Guscic emphasized WebBeds’ global growth trajectory and its focus on achieving medium-term margin stabilization at 6.5%, with a long-term target of 50% EBITDA margin.
Guscic remarked, “WebBeds continues to grow organically as one of the fastest-expanding travel brands globally, and we remain confident in delivering sustainable profitability.”
The company’s commitment to navigating operational challenges while strengthening its financial framework underscores its focus on maintaining resilience in the competitive travel sector.
