The Webjet Limited (ASX: WEB) share price is on the move on Wednesday morning following the release of its full year results. This follows the company's decision to shift its financial year to end on 31 March.
At the time of writing, the online travel agent's shares are down 1% to $4.60.
How did Webjet perform in FY 2021?
It is no secret that Webjet has been struggling greatly because of the pandemic. In light of this, it will come as no surprise to learn that the company is reporting a significant decline in revenue and a sizeable loss for the nine-month period ending 31 March.
According to the release, Webjet recorded total transaction value (TTV) of $453 million and revenue of $38.5 million in FY 2021. This compares to TTV of $3,021 million and revenue of $266.1 million during the 12 months of FY 2020.
This means that Webjet was operating with a TTV/revenue margin of 8.5% in FY 2021, which is only down slightly from 8.8% in FY 2020.
And despite cutting its underlying expenses down to $94.8 million, compared to $238.5 million in FY 2020, this wasn't enough to stop the company from recording a sizeable $56.3 million underlying operating earnings loss.
On the bottom line, the company recorded an underlying loss of $88.8 million. This is an increase from an underlying loss of $42.3 million during the 12 months of FY 2020.
Nevertheless, the company has the balance sheet strength to handle this. At the end of the period, Webjet had $431 million pro forma cash on hand. It also notes that its term debt maturity has now extended to November 2023, which it feels gives it a significant runway.
Trading update
Failing to give the Webjet share price a boost this morning was an upbeat update on its performance during the month of April. Management notes that as markets reopen, its businesses are rebounding quickly.
For example, during April, Webjet OTA Australian domestic bookings were 95% of April 2019 levels, WebBeds USA TTV was at 83% of April 2019 levels, and Online Republic bookings were 48% of April 2019 levels.
Management commentary
Webjet's Managing Director, John Guscic, said: "We are hopeful that vaccine rollouts will allow travel markets to reopen and continue to do everything we can to make sure we are optimally positioned to capture the significant global B2B market opportunity and accelerate bookings growth in our B2C businesses."
"We know there is strong demand for travel – we've seen that with the performance of Webjet OTA, with Australian domestic bookings reaching 95% of pre- Covid bookings in April. Webjet OTA has always had a key strength in servicing the domestic leisure market and our ability to scale costs in line with demand meant it was profitable as soon as borders opened.
"The Australian and New Zealand domestic borders remaining opened also meant we saw Online Republic return to profitability in April and believe there is considerable scope for that business as global leisure markets reopen.
While WebBeds continues to be impacted in most regions, we know that once borders do open, our businesses rebound. We're already seeing that in North America. The US is among the first to reopen and WebBeds is already at 83% of pre-Covid TTV in that market. WebBeds is committed to emerging from Covid as the #1 global B2B provider and we are confident our transformation initiatives will materially reduce costs across the business. As such, we have increased WebBeds' profitability target to 8/3/5 once the business is back at scale," he added.
Outlook
Webjet notes that there is strong pent-up demand for travel. This is particularly the case for leisure travel.
Pleasingly, management believes it is well positioned to capture the pent-up demand after transforming all of its businesses to be ready to capitalise when global travel returns.
It also points out that the structural shift from offline to online continues to accelerate, with all its businesses positioned to capture demand through the medium.
Mr Guscic commented: "While we wait for markets to open, we have not stood still. We have taken the opportunity to transform our business to be ready for the recovery. We have looked at ways to be more agile, lean and efficient across the entire business – from service and quality, to operating and marketing, to capital strength, and management restructuring. We have created a global platform that will reduce costs at scale by at least 20% and provide the structural support to focus on those markets that will rebuild fastest, where competitors are weakest, and we can target the #1 position."
"We see a world of opportunity. We know people cannot wait to travel – to reunite with families and loved ones, to embark on adventures and to explore the world. Webjet has significant cash reserves, we have a team that's always been agile and hungry to win, and we are ready to go," he concluded.
