Webjet shares were one of a handful of stocks to withstand the selling rush yesterday on the shock US election result.
They ended up 4.6% at $9.75, after being up more than 14% in early trading after revealing a fat profit on the sale of an unwanted asset.
The company told the ASX before trading that it was selling its Hong Kong and Singapore-focused Zuji business to subsidiaries of HK travel technology group Uriel Aviation for $56 million.
Webjet says that will net it a gain of $26 million on the sale of the business it acquired in March 2013.
CEO John Guscic said in yesterday’s statement that“Since acquiring Zuji in March 2013, we have taken out more than $5 million in annual costs and turned the Zuji businesses into profitable operations in a competitive market.”
"We remain committed to expanding our presence in Asia through B2B hotels and are delighted to announce that we will be launching FIT Ruums later this month. FIT Ruums is a new start-up which extends our B2B division across key Asian markets.”
"As part of the agreement, the parties have entered into a Transitional Service Agreement under which Webjet will provide transitional services on a fee-for-service basis for 12 months to assist with the smooth transition of the businesses to the new owners.
"Completion of the sale is subject to satisfaction of required regulatory approvals and third party consents and is expected to occur by 28 February 2017, “He said.
As a result Webjet directors raised its 2016-17 earnings guidance to $78 million.
This consists of $60 million earnings before interest, tax, depreciation and amortisation (EBITDA) for the continuing businesses – Webjet, Online Republic, Lot of Hotels and Sunhotels (including the Thomas Cook alliance), $26 million gain on the sale of Zuji, less charges of $8 million.
Mr Guscic said in yesterday’s statement “We are continuing to gain market share in each of our business units. In the Australian market, the current unprecedented range and value of air fare deals is encouraging consumer search activity. This underlines the power of Webjet’s market footprint which provides our customers with easy, immediate comparisons and increased conversion rates are propelling our overall growth, particularly for international bookings.
"In addition, all our B2B businesses continue to demonstrate superior growth in difficult market conditions and business profitability has substantially improved. We remain on track to deliver more than $11 million EBITDA from our B2B businesses during the 2017 financial year.”
Webjet’s earnings before interest, tax, depreciation and amortisation in the 2015-16 financial year was $36.6 million.
