Webjet shares sink as margins fail to track FY25 estimates
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The news: Webjet shares tumbled on the ASX after the travel bookings provider delivered a softer-than-expected trading update for both its B2B and B2C businesses.
The numbers: Shares were down 7.1% to $7.67 by 1:50pm AEST.
Webjet said it is "on track to deliver $5 billion of TTV [time to value] in FY25" for its B2B business WebBeds, roughly in line with consensus estimates of $5.1 billion.
However, the company said it expects TTV margins to be around 7% for the first half of the year, with EBITDA margins at around 50%. RBC Capital Markets analyst Wei-Weng Chen noted that this is below Visible Alpha consensus of 7.9% TTV margins and 52.3% EBITDA margins for the first half, and implies a 15% downgrade to potential first-half EBITDA consensus.
Meanwhile, Webjet also said its B2C business Webjet OTA is trading behind expectations at the start of the financial year, with bookings and TTV down 5% and 10% respectively. This compares with first-half consensus expectations for B2C bookings growth of 4.7% and B2C TTV growth of 0.5%.
The context: Webjet flagged that B2B trading in Europe was impacted by the collapse of tour operator FTI Group, which resulted in around $2 billion in hotel inventory distorting the market and impacting margins. Meanwhile, the Paris Olympics impacted demand for France and the European Football Championships reduced German outbound travel.
Webjet attributed the slowdown in B2C business to cost-of-living pressures and Rex Airlines going into administration, while the reduction in TTV is reflective of price deflation in international airfares.
The sources: ASX announcement, RBC Capital Markets research
