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Highlights
- Webjet shares fell 2% to 82.5 cents after half-year results were released.
- Bookings, total transaction value (TTV), and revenue declined due to tough economic conditions.
- Net profit after tax rose 2.2%, driven by a focus on higher-margin products and cost control.
Webjet Ltd. (ASX:WJL) shares declined 2% on Tuesday, closing at 82.5 cents, as investors reacted to the company’s first financial results following its demerger from Web Travel Group Ltd (ASX:WEB).
The online travel agent reported declines in key metrics, including an 8% drop in bookings to 783,712 and a similar 8% fall in total transaction value (TTV) to $752 million for the six months ending September 30. Revenue dipped 1% to $72 million compared to the prior corresponding period.
Despite these declines, Webjet achieved a modest 1% increase in EBITDA to $19.4 million and a 2.2% rise in net profit after tax (NPAT) to $9.2 million, highlighting the company’s focus on improving margins and operational efficiency.
Challenging Market Conditions
The declines in bookings and revenue were attributed to ongoing macroeconomic pressures, particularly in the Australasian market. Managing Director Katrina Barry acknowledged that cost-of-living challenges have dampened demand for domestic flights, a key segment for Webjet’s operations.
“Economic conditions in Australasia remain sluggish, and cost-of-living pressures continue to suppress travel demand,” Barry said. The impact was further exacerbated by REX Airlines entering administration, disrupting domestic leisure travel bookings.
Margin-Focused Strategy
Despite the downturn in demand, Webjet managed to enhance profitability by targeting higher-margin opportunities. The company increased its focus on selling ancillary services and expanding international flight bookings, which have higher revenue margins.
“Revenue per booking is now higher than pre-pandemic levels,” Barry noted. “This improvement, combined with our ongoing cost-control measures, has boosted Webjet OTA’s profitability.”
Outlook Remains Cautious
Looking ahead, Webjet’s management expects trading conditions to remain challenging in the short term, reflecting persistent economic headwinds. However, the company remains optimistic about its medium-term prospects, citing opportunities to grow its higher-margin business segments further.
