Webjet (ASX:WEB) share price edges lower on H1 FY21 results

The Webjet Ltd (ASX: WEB) share price is edging lower today following the release of its half-year results for 2021. We take a closer look.

| More on:
A hand moves a building block from green arrow to red, indicating negative interest rates

Image source: Getty Images

The Webjet Ltd (ASX: WEB) share price is edging lower this morning following the release of its half-year results for 2021. In opening trade, shares in the online travel agent are marginally down 2% to $4.68.

Let’s take a look and see how Webjet performed for the H1 FY21 period.

Financial highlights

The Webjet share price is trading lower today after announcing a weak first-half result.

According to its release, Webjet reported heavy falls across its key business metrics due to COVID-19 government-mandated travel restrictions.

For the six months ending December 31, Webjet delivered a total transaction value of $267 million, down 89% over the prior corresponding period.

Group revenue plummeted to $22.6 million, dropping 90% over the same time last year. The biggest fall came from its WebBeds segment which sank from $127.5 million in H1 FY20 to $8 million for the reporting period.

Ongoing travel restrictions and lockdowns impacted bookings in all of its regions. The company noted that it is in the process of executing a transformation strategy that will see a 20% improvement in costs when at scale.

Expenses for the period were driven lower as a result of management’s focus on cash burn and cost reduction initiatives. For the period, Webjet recorded expenses at $62.7 million, a 52% decline on the prior comparable term.

Underlying earnings before interest, tax, depreciation, and amortisation (EBITDA) sharply retreated with the company reporting a $40.1 million loss. This is a mammoth 146% plunge when matching against H1 FY20’s result.

For the end of December, Webjet recorded a strong cash position of $283 million to withstand prolonged periods of recovery. In contrast, the company’s monthly cash burn rate is $4.8 million per month. This gives Webjet enough breathing space to run operations for the next 5 years without raising additional funds or drawing down on debt.

In light of the expected results, the Board refrained from declaring an interim dividend due to the uncertain travel environment. Furthermore, management stated that it will further defer FY20’s interim dividend payment.

Previously the company planned to reward shareholders on the 16 April 2021 with 9 cents per share. However, this has been further delayed until next year, pending review of H1 FY22 results.

Management commentary

Webjet Managing Director, John Guscic, commented on the result:

These results reflect the devastating impact COVID-19 continues to have on the global travel industry. We remain focused on maintaining our strong capital position. Cost savings initiated across all businesses helped reduce cash burn, while allowing us to return staff to full time work.

Looking ahead, John Guscic appeared optimistic that the travel industry will quickly rebound once restrictions open up. He added:

The demand for travel – and in particular leisure travel – remains high. We believe people will want to travel as soon as they are able to and we are doing everything we can to ensure Webjet is there to capture demand when it happens.

…We are hopeful that global vaccine rollouts will enable travel to return to historical levels and our strong capital position provides flexibility to weather any protracted market recovery.

Review of the Webjet share price

Over the last 12 months, the Webjet share price has been one of the worst performers with a staggering fall of more than 60%. The company’s shares once comfortably above $10, however, the COVID-19 rout caused headwinds for Webjet.

In March, its share reached a multi-year low of $2.25 and has since travelled slightly higher in hope of a recovery in the travel market.

Based on the current share price, Webjet has a market capitalisation of around $1.6 billion.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News