Travel Shares Soar On Webjet, Flight Centre Results
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Strong half year results yesterday from our two major listed travel groups, Webjet (which is an online operation) and Flight Centre (bricks and mortar and online).
So solid were the results that investors chased the shares, pushing them each up by double digital amounts.
Taken with the very strong Qantas interim profit, it is clear the travel and airline sector will be one of the best performed in the current reporting season. Flight Centre saw a sharp 37% jump in earnings and has lifted its annual guidance and interim dividend.
The company said it earned $102.2 million, off the back of US tax rate changes and a solid performance in the UK.
The company says it now expects full-year underlying profit before tax to be between $360 million and $385 million, up from between $350 million and $380 million, after revenue for the six months to December 31 grew 5.4% to $1.4 billion.
Flight Centre has declared a fully franked interim dividend of 60 cents, up a third from 45 cents a year ago.
CEO Graham Turner said in yesterday’s statement the solid first half to December 31 had given the company a strong foundation for the full financial year.
“Generally, we can be pleased with our performance to date, given we are tracking at or near record levels in most key financial areas," he said.
“Given the strategic progress we have made and our positive start to the year, we now believe that our profit will finish slightly higher than initially expected and we have adjusted our guidance accordingly.”
Before tax profits were up 27.7% to $139.4 billion, exceeding its forecasts, and total transaction value hit a record of $10.2 billion.
While the business has upped its forecast and is tipping profit growth in the second half, the accelerated growth rate achieved in the first half was not tipped to continue.
Flight Centre is expecting further short-term disrupting in its Australian leisure business, while its new market share growth plan is implemented.
Despite this the company is looking for growth to come from corporate travel in Australia and New Zealand, as well as its overseas businesses.
“Generally the company expects 1H operational trends to continue, with overseas businesses, particularly the large North American and EMEA operations, likely to drive FY18 profit growth," Mr Turner said.
Flight Centre shares ended the day up more than 10% at $55.26.
Meanwhile Webjet shares jumped more than 21% at one stage yesterday after the company reported a 63% surge interim in operating earnings before interest, depreciation, tax and amortisation over the first half of the financial year as the benefits of its big UK buy last year started appearing. The online travel booking firm said the total transaction volume from customers passing through the website jumped 55% to $1.4 billion.
Operating earnings before interest, tax, depreciation and amortisation rose $41 million, while net profit for the half was up 25% at $20 million.
An interim dividend of 8 cents was declared, up from 7.5 cents previously.
The shares ended at $12.01, still up an impressive 16%.
As for the outlook Webjet said: “January 2018 bookings are up in all businesses and we expect trading for 2H18 to be stronger than 1H18”.
“We remain on track to deliver full year EBITDA of more than $80 million inclusive of $1 million costs in relation to the JacTravel acquisition (The UK buy).”
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.