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- Webjet’s (WEB) latest half-year results have run into turbulence amid the ongoing COVID-19 pandemic
- The online travel agent’s interim revenue, coming in just shy of $23 million, represents just over a tenth of what was recorded during the same period last year
- As a result, WEB moved from a $9 million net profit at the end of 2019 to a $132.2 million loss
- But, as WEB’s earnings fell, so did expenses — the company dropped expenditure by 52 per cent to $62.7 million during FY21’s first half
- Bracing for further instability in the travel market, Webjet has bolstered its cash position
- The travel stock brought in over $163 million from a notes sale last July, taking its reserves up to $283 million
- Today’s results and prolonged instability mean WEB hasn’t declared an interim dividend
- Nevertheless, shareholders don’t seem all that phased, bringing the WEB share price 1.67 per cent higher in intraday trade to $4.86 per share
Webjet’s (WEB) latest half-year results have run into turbulence amid the ongoing COVID-19 pandemic.
The online travel agent tabled a 90 per cent drop in revenue over FY21’s first half compared to the previous corresponding period.
That means WEB’s interim revenue came in at $22.9 million — representing just over a tenth of the $218.2 million it brought in during FY20’s first half.
The consumer discretionary stock’s profit also nosedived, falling from a $9 million net profit at the end of 2019 to a $132.2 million loss.
But, as WEB’s earnings fell, so did expenses — the company dropped expenditure by 52 per cent to $62.7 million during FY21’s first half.
“These results reflect the devastating impact COVID-19 continues to have on the global travel industry,” Webjet Managing Director John Guscic commented today.
As it prepares to face an extended downturn in market conditions, Webjet has buoyed its balance sheet with extra cash. At the end of December, the travel stock held $283 million in cash and cash equivalents — up on the $209.6 million in the back at the end of June.
The fresh cash injection came in the form of a notes issue in July — from this, WEB nabbed an extra $163.2 million to boost its bottom line.
Because of the dismal financials and ongoing market uncertainty, Webjet hasn’t declared an interim dividend. Combined with the current market outlook, it could be a while before WEB’s profitability returns to pre-COVID levels.
Travel market turbulence
According to the International Monetary Fund, travel and tourism has become key to the global economy, accounting for 10 per cent of global GDP and over 320 million jobs around the world.
This industry has suffered, however, as the pandemic forced flights to grind to a halt and kept tourists at home on staycations. In Australia, travel fell to its lowest level in 24 years, according to an Australian Bureau of Statistics (ABS) report released today.
The ABS also revealed Aussie travel in 2020 was down 75 per cent on the previous year, with 92 per cent of short-term trips taken before travel restrictions were instated in late March.
It doesn’t look like those figure will rebound anytime soon — a report from McKinsey & Company maintains the global travel outlook remains bleak.
“… tourism spending is not likely to return to pre-crisis levels until 2024. This puts as many as 120 million jobs at risk,” the management consulting company stated back in August.
As a result, while the pandemic continues to wreak havoc with the tourism industry, it seems the fate of ASX-listed travel stocks will remain up in the air.
Today, however, WEB’s share price seemed to escape the broader reversal, trading 1.67 per cent higher in intraday trade to $4.86 per share at 12:49 pm AEDT.
