Webjet (WEB) shares soared 28% at one stage yesterday and finally closed up 21.6% at $3.04 after the company, a big online travel business, beat market expectations, thanks to the Zuji takeover last year which appears to be coming right at last.
The shares ended up 26% at $3.16.
Webjet reported a 60.3% rise in first-half profits to $9.1 million and declared a fully franked interim dividend of 6.25c a share.
That dividend was up a quarter of a cent from the 6c a share paid for the first half of 2012-13.
That was a rise in earnings per share to 11.6c, indicating the company had plenty of room to be a touch more generous.
The company said this was a year of significant core infrastructure development as the Webjet platform moved into the (technology) cloud and Zuji (which caused financial indigestion in 2012-13 after its takeover) migrated successfully onto the Webjet platform.
Revenue rose 64% to $52 million, driven by the acquisition of Zuji, which contributed $18 million to revenue growth. The result surprised analysts who had been expecting a more modest performance.
WEB 1Y – Webjet soars on profit growth
The company has been under pressure since reporting a weak profit for the year to June 2013 when Webjet’s profit collapsed 52.4% to just $6.5 million. The acquisition of Zuji earlier this year for $US25 million did most of the damage – about $7 million, consisting of $5.4 million in "acquisition and transition costs" plus another $1.6 million in trading losses.
It would appear those problems are now behind Webjet.
Webjet CEO John Guscic obviously thinks so, saying in a brief comment with yesterday’s profit announcement, "We have delivered exceptional results following the transformation and integration of Zuji and major margin improvement in the core business".
A big factor in the higher profit (but nowhere near the main reason for the increase) was Webjet being able use its accrued losses to bring down the tax paid to 20%, from 33% in the first half of the previous year.
