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Significant profitable growth Record performance across all metrics $3.8BN TTV (up 27%), $124.6M EBITDA (up 43%), $81.3M NPAT (before AA) (up 46%)

August 23, 2019 Financial No Comments Email Email

Webjet Limited today announced its financial results for the 12 months ending 30 June 2019.

Webjet Limited delivered a 43% increase in EBITDA (earnings before interest, tax, depreciation and amortisation) to $124.6 million. Revenue grew 26% to $366.4 million and net profit after tax (NPAT) was up 46% to $81.3 million (before acquisition amortisation (AA)). The company also announced a fully franked final dividend of 13.5 cents per share, bringing the total dividend for the year to 22 cents, an increase of 10%.

Following the acquisitions of both JacTravel and Destinations of the World (DOTW), the Company’s WebBeds business is now the largest business across bookings, TTV and EBITDA. WebBeds TTV was $2.2 billion, up 59% over FY18 and EBITDA was $67.3 million, up 148%, with strong growth coming through in all regions.

The Webjet Online Travel Agency (OTA) continues to outperform with flight bookings growing around twice the underlying market. Despite a tough domestic market in FY19, both TTV and EBITDA margins improved, increasing to 10.9% and 40.4% respectively.

KEY FINANCIAL HIGHLIGHTS1 • $3.8 billion Total Transaction Value (TTV) – up 27% • $366.4 million revenue – up 26% • $124.6 million EBITDA – up 43% • 34.0% EBITDA margin – up 398 bps • $81.3 million NPAT (before AA) – up 46% • 63.3 cents EPS (before AA) – up 31% • Full year fully franked dividend of 22 cents – up 10%

Commenting on the result, Managing Director John Guscic said:

“FY19 was an outstanding year of profitable growth for Webjet – transacting $3.8 billion in TTV and delivering another record profit for our underlying business.

It was a phenomenal year for our WebBeds business – in just over 6 years since launching our start up in the Middle East, our global business is now delivering over $2 billion in TTV. We continue to gain share and consolidate our position as the #2 global B2B player and our increased size and scale is allowing us to focus on pursuing more profitable growth, resulting in higher TTV and EBITDA margins coming through in all regions. Our results demonstrate that the investments we have made ahead of the curve to be well placed to pursue growth are now paying off in terms of increased bookings, TTV and EBITDA.

The Webjet OTA brand continues to strengthen and gain share as the #1 OTA in the market. While the domestic travel market was tough, impacted by the Federal election as well as slowing economic conditions, our commitment to delivering value to both customers as well as our airline and other partners saw TTV margins continue to improve while increased scale and a tight focus on managing costs helped maintain EBITDA margins above 40%. Our Online Republic strategy to target more profitable bookings improved TTV margins but the business was impacted by the Christchurch incident in March 2019 which temporarily reduced demand for travel in New Zealand. We estimate the incident resulted in a more than $1 million EBITDA impact to the business.”

The table below shows results for Webjet Limited’s continuing operations and the statutory result:

BUSINESS UNIT PERFORMANCE

WebBeds

FY19 saw higher TTV and EBITDA margins in all regions. Despite difficult conditions in Europe and the Middle East, the business delivered strong results in both markets by focusing on selling directly contracted inventory and increasing margins. The Americas delivered substantial EBITDA driven by strong bookings growth in North America. Asia Pacific remains the world’s fastest growing B2B region and the investment in the region over the last 2 years is starting to pay off with a strong turnaround in profitability in 2H19.

Scale efficiencies are starting to come through in each region and the successful integration of DOTW into the WebBeds regional structure just 6 weeks after acquisition delivered cost synergies ahead of plan.

The WebBeds FY19 EBITDA result is after expensing $1.4 million in the launch of Umrah Holidays International, the first truly online B2B provider of travel services for religious pilgrims. Adjusting for acquisitions, organic EBITDA was up 30% over FY18, assisted by synergies coming through.

Commenting on outlook for WebBeds for FY20 and beyond, John Guscic said:

“We continue to see significant opportunities for profitable growth across all regions. We are the #2 global player and yet still have less than 4% market share of the global B2B hotels market. As well as driving organic growth, we remain on the lookout for attractive acquisition opportunities to supplement our existing businesses. Following the successful integrations of both JacTravel and DOTW, we have a framework for extracting synergies which can be used for future acquisitions.

As we continue to gain scale in all markets, by FY22 we believe we can deliver an “8/4/4” profitability target in the WebBeds business – 8% revenue/TTV and 4% costs/TTV to deliver 4% EBITDA/TTV. This equates to a 50% EBITDA margin target. We expect costs to continue to grow at a lower rate than revenue driven by the optimisation of technology platforms and the ongoing impact of Rezchain, our industry leading blockchain solution.”

Webjet OTA

Webjet OTA continued to gain market share with flight bookings growing around twice that of the underlying market. TTV margins continue to increase due to sales of higher margins products across both flight and ancillary products, while scale benefits and a strong focus on managing costs increased EBITDA margin to 40.4%.

Online Republic

The strategy to target more profitable bookings with higher TTV margins and lower acquisition costs improved TTV margins however the March 2019 Christchurch incident reduced demand for travel in New Zealand and Motorhomes in particular was severely impacted. Cars performed well, driven largely by international growth while Cruise continued to underperform in line with ongoing capacity constraints.

Commenting on outlook for the B2C businesses for FY20 and beyond, John Guscic said:

“The Webjet OTA is now 50% of the entire OTA flights market in Australia and accounts for over 5% of all domestic flight and 4% of international flight bookings. While FY19 was a challenging market we continue to refine our offering and see above market growth opportunities across both flights and our range of ancillary products.

Consistent with our FY19 strategy, we continue to focus on higher TTV margins and lower acquisition costs in Online Republic. We have also made two recent senior leadership appointments aimed at driving profitable growth across the businesses and in particular improving performance in the Cruise business.”

CASH CONVERSION

In line with the 95%-110% target, Webjet Limited’s underlying cash conversion was 98%, reflecting continued improvements in working capital management.

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