Jetset Travelworld (ASX: JET) reported normalised earnings of $54.6 million for FY13, up 8.1% on last year. Overall, CEO Rob Gurney said the group benefited from an increased focus on cost reduction, margin management and emphasis on its restructuring initiative. Net profit was $16.5 million, up over 200% on the prior year.
Currently split into three divisions, Retail, Wholesale and Travel Management, the group struggled with a sharp fall in total transaction values in the first half of the year, amidst competitive pressures and declining demand from government and corporate clients.
The group is finalising a transformation plan to redefine its long-term strategic direction. The plan includes a whole new brand, Helloworld. The group wants to unite over 1,000 existing members and travel agent franchisees under the Helloworld brand, with a store and online rollout to start in the December quarter.
In FY13, non-recurring expenditure on the transformation project was $10.8 million, with a further $35-$40 million forecast for the project, which is due for completion in the next 12-18 months. Forecast earnings of $40-$45 million for FY14 are weighed down by the transformation costs.
The group announced a final dividend of 0.5 cent per share, fully franked. The share price is down sharply in trade today.
Foolish takeaway
Launching a completely new brand into the market is a significant gamble for Jetset. The group does not expect to see the benefits, in terms of improved market share and growth, to FY15. In a competitive market the share price has underwhelmed in recent years. It will do well to reverse this trend.
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Motley Fool contributor Tom Richardson does not own shares in any of the companies mentioned in this article.
