It might be a miserable day for the consumer discretionary sector, but spare a thought for Webjet Ltd (ASX: WEB) shares.
While retail conglomerate Wesfarmers Ltd (ASX: WES) is being scolded for its low-growth FY24, with shares sinking 4.8%, Webjet is getting rinsed to the nth degree amid its annual general meeting (AGM). Shares in the travel business are down 8.41% to $7.57, suggesting something awry in today's information.
Most of the information in Webjet's AGM pack was already known to investors, relating to results published in May of this year. Based on this, we can only assume today's bad taste originates from the brief overview of trading in FY25 so far.
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Travel spend goes on a vacay
First, we need to set the scene. Webjet's revenue and earnings have been marching higher since 2021. Recovering from the pandemic, revenue jumped 29% in FY24 to $471.5 million, while earnings before interest, taxes, depreciation, and amortisation (EBITDA) soared 40%.
The online travel agent segment, known as webjet.com.au, was slower to grow than the company's WebBeds. However, EBITDA still increased by 25% to $54.2 million, as shown in the image below. Importantly, the smaller segment still constituted roughly 29% of the company's EBITDA for FY24.
Fast-forward to today, and we can see how the current financial year (FY25) is tracking. In the FY25 trading update portion of the presentation, Webjet notes a few negative numbers, which are likely hurting its shares.
For example, the total transaction value (TTV) under WebBeds was 'up more than 25%' as of 25 August 2024. Yet, WebBeds TTV in FY24 was 42% higher, indicating a moderation in the value of bookings being processed. It was noted that the Paris Olympics and the European Football Championships weighed down travel demand.
Unfortunately, the pulse check on Webjet OTA was much weaker. Bookings and TTV are down 5% and 10% respectively year-to-date. This compares to a 5% and 6% increase in bookings and TTV in FY24. Webjet attributes the slowdown to the cost of living pressures and Rex Airlines folding.
Is it all bad for Webjet shares?
There is a pocket of positivity within Webjet's AGM.
WebBeds is still growing strongly, with the travel wholesaler on track to hit $5 billion of TTV in FY25. Likewise, growth in bookings through the WebBeds segment is mostly in line with the prior financial year at 'more than 20%'.
Additionally, it seems the company isn't seeing as much cost inflation as other ASX-listed companies. The WebBeds division is tracking at around the same EBITDA margin (50%) as last year and Webjet OTA is seeing stronger EBITDA margins compared to the same period last year.
Webjet is expected to report its first-half results for FY25 on 20 November 2024.
The Webjet share price is up 3% compared to a year ago. While it underperforms the benchmark index, it's still better than the 6.5% fall experienced by Flight Centre Travel Group Ltd (ASX: FLT) shareholders.
