Media Release
Half Year Results To 31 December 2007
12th February 2008
- Profit Doubles* - Income Accelerates - Interim Dividend - No Debt
Webjet today announced a doubling* of profit for the six months to 31 December 2007 compared with the same six months the previous year.
The following tabulation provides the key indicators for the six months ended
31 December.
Commenting Webjet managing director David Clarke said,
"We are delighted with the results recorded to the end of December. These results carry on the momentum achieved over the last 18 months and indicate that our aggressive marketing campaign, along with exceptional customer service and leading technology investment, is delivering substantial shareholder value."
Market Guidance Full 07/08
Trading for the new calendar year for the month of January has continued the trends established in the six months to 31 December.
In terms of the outlook for calendar year 2008, consistent with our advice to the market in August last year, factors which may negatively impact on the demand for travel are:
- Interest rates and mortgage repayment impact on consumer discretionary dollar
- Bowser petrol price
- The health of the share market and potential impact on consumer confidence
These potential negatives are unchanged from our August synopsis and to some degree are counter balanced by the following positive macro factors:
- Full employment in Australia
- Wage growth even if slightly inflationary
- Airline capacity and competition even if capacity increases are somewhat delayed
It is currently our view given this mix of pluses and minuses that the market is likely to be more price sensitive over the next six months than was the case in the lead up to December. We do not, however, necessarily view that as margin dilutionary as competition is likely to intensify at a supply level. If this environment eventuates consumers will become more value conscious and in turn it is likely that those values will be sought through airline aggregation sites of which we are currently the leader.
At this early juncture in 2008, these factors are finely balanced and whilst the current trading environment, as evidenced by January, remains strong it is too early to form a final view on the likely outlook over the next six months or twelve months.
On current indications we provide the following market guidance update:
Capital Management and Acquisitions
Potential acquisitions still remain under intensive examination. We consider that our significant caution in this area has been vindicated by current sharemarket corrections and as we indicated at our Annual General Meeting, we are determined to ensure that any potential acquisition fits precisely with our current business plan and does not involve Webjet in the payment of price earning multiples beyond a certain level.
Webjet currently has no debt and we also consider that our extremely conservative position on this matter has proven to be a prudent decision.
As previously advised, cash reserves are extremely strong at $23m and our profit generation given low levels of debtors, essentially translates into cash.
Against that background, the Board has considered the issues of dividends and capital buyback and advises:
1. Interim Dividend
In the light of the very strong results to the end of December, the Board has decided to pay an interim dividend of 2 cents per share unfranked. The following relevant dates apply:
Ex-Date: 31 March 2008
Record Date: 4 April 2008
Payment Date: 18 April 2008
On current indications we expect the final dividend for the year to be fully franked.
2. Capital Buyback
The Board has given extensive consideration to the question of a capital buyback and considers that the current extreme Australian Stock Exchange market volatility and the fact that the strategic opportunities remain under examination, that it is not appropriate at this point in time to undertake an on-market buyback.
The matter will remain under continuous review as opportunities that may become available are assessed. In the interim, as Webjet has no debt and substantial cash reserves, we are in a strong and flexible position to take advantage of any appropriate commercial opportunity which fits with our business plan.
Strategic Developments
Webjet will shortly be launching our revised hotel offering and associated technology improvements.
This follows on from the implementation of our worldwide GTA agreement for hotel supply which increases our hotel range and margin arrangements without merchant risk and without manufacturing cost. The inventory is secured on a year round basis (not just last minute inventory) and covers over 50 countries and over 20,000 hotels at extremely competitive market levels.
The enhanced technology will be released to the market in mid-March and uniquely capitalises on our existing flight database bookings and will automatically present relevant hotel offerings coinciding with flight dates in a matrix display whilst the flight booking payments are being processed, thus allowing customers ample opportunity to make considered selection of hotels without re-entering and reconstructing passenger and payment arrangements.
This will provide Webjet with a unique competitive advantage in the Australian market.
PLANITONEARTH
PLANITONEARTH is showing dramatic customer acceptance and increased usage rates to the extent that over the last two months the following PLANITONEARTH environments have been created:
The significance of PLANITONEARTH in our strategic developments remains unchanged and extends Webjet's involvement with our customer database from the beginning of travel planning, right through the transaction completion process to subsequent travel and holiday experiences with friends and associates.