Webjet share price rockets 14% on record earnings and demerger announcement

ASX 200 investors are sending the Webjet share price flying higher on Wednesday.

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The Webjet Ltd (ASX: WEB) share price is surging higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) travel stock closed yesterday trading for $8.44. In morning trade on Wednesday, shares are swapping hands for $9.58 apiece, up 13.5%.

For some context, the ASX 200 is up 0.2% at this same time.

This comes following the release of Webjet's full-year results for the 12 months to 31 March (FY 2024), alongside a potential demerger announcement.

First, to the full-year results.

Webjet share price rockets on surging revenue

  • Revenue of $472 million, up 29% year on year
  • Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $188 million, up 40% from FY 2023
  • Underlying net profit after tax (NPAT) of $128 million, up from $70 million in FY 2023
  • 7 million bookings, up 21% year on year
  • Total transaction volume of $5.6 billion, up 29% from last year

What else happened with Webjet during the year?

The Webjet share price also looks to be catching tailwinds with all the key financial metrics at its WebBeds hotel distribution solutions businesses well ahead of FY 2023. That includes TTV for the full year of $4.0 billion.

Booking volumes at WebBeds were up 26% year on year. That drove a 39% increase in EBITDA to $162 million, with an EBITDA margin of 49.5%.

And Webjet OTA, the company's online travel agency, reported an ongoing material increase in international market share. That saw this segment deliver a 25% year on year increase in EBITDA of $54 million, with the EBITDA margin at a record 44.7%.

Across the businesses, Webjet generated $116 million of cash over the year. The company held $630 million in cash as at 31 March.

Passive income investors will need to wait a while yet for the return of the Webjet dividend.

No dividend was declared for FY 2024, with management saying dividends will be revisited following the five-year term of the company's convertible note in April 2026

Webjet last declared a dividend in early 2020, shortly before the global pandemic brought the travel sector to a grinding halt.

What did management say?

Commenting on the results sending the Webjet share price rocketing today, managing director John Guscic said, "FY 2024 was a fantastic year for the Company with record earnings that were well ahead of last year."

Gusic added:

In transforming WebBeds and increasing Webjet OTA's market share we have delivered what we set out to do in the post pandemic recovery. We are confident that demand for travel will continue to grow and are excited for the opportunities ahead for both businesses.

What's next for Webjet?

Looking at what could impact the Webjet share price in the year ahead, Gusic said:

Our key focus going forward is on delivering our $10 billion TTV target in FY30.

We have a strong track record of delivering organic growth and believe we can grow at least twice the underlying market by focusing on our three pillars of growth – growing our existing portfolio of travel buyers, hotel partners and suppliers; targeting new customers, securing new supply and entering new markets; and continuing to improve conversion rate in order to sell more of what we have to everyone.

What's all this about a demerger?

Also likely impacting the Webjet share price today was the company's announcement that it may separate its two travel divisions, WebBeds and Webjet B2C, which encompasses Webjet OTA as well as GoSee and its tech platform Trip Ninja.

Should the demerger go ahead, the company expects both new entities will be listed on the ASX.

Commenting on the potential demerger, Webjet chairman Roger Sharp said:

Having carefully weighed up the arguments for and against a demerger, the board sees significant value enhancement through a potential separation of our two industry leading businesses and brands.

Our B2C businesses will continue to deliver organic growth through the shift to online, while separation will support our WebBeds business in its relentless focus on achieving scale in all markets, in a post pandemic landscape characterised by a reduced number of smaller competitors.

Webjet share price snapshot

With today's big boost factored in the Webjet share price is up 29% so far in 2024.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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