Shares in Webjet Group Ltd (ASX: WJL) are taking a beating on Thursday after the company issued a profit downgrade and missed earnings expectations by a wide margin.
The company was putting a positive spin on its first half results, saying the underlying EBITDA of $14.4 million was in line with expectations and the company had shown "resilience in (a) tough trading environment".
But the company's forecast for full-year earnings was downgraded by 9% to 14% to $30 to $32 million in an "ongoing subdued trading environment".
The company's shares fell as low as 68.5 cents before recovering to be 16.7% lower at 72.5 cents in early trade.
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Bookings down
Among other metrics reported on Thursday, Webjet said bookings were down 8% against the same period last year, revenue was 1% lower at $67.9 million, and underlying net profit was $7.8 million, up 16%.
The company said in its statement to the ASX:
Webjet Group's underlying results for the first half of FY26 were broadly in line with the company's expectations, demonstrating resilience in a challenging trading environment across the industry and investment for future growth.
The travel industry suffered a number of shocks in the half the company said, including heightened tension in the Middle East, tariff-related trade disruptions, general cost of living pressures, and higher Australian domestic airfares.
For (Webjet's) core flights product, the above meant the domestic leisure market remained subdued. The international outbound sector saw some strong demand, however predominantly in lower-revenue short-haul Asian destinations rather than the higher revenue long-haul destinations to Europe and North America.
Webjet said it had an "unleveraged balance sheet" and would give more guidance on capital management plans at its annual general meeting on 19 November.
On the outlook, the company said it was sticking to its FY30 Strategic Plan; however, it would pull back on investment while times were tough.
Any further pull-back of discretionary spend would only disrupt the Company's clearly defined transformation roadmap, enable competitors to move ahead in a fast-paced environment, and limit the focus on creation of long-term shareholder value. Importantly, with the necessary investment for growth, Webjet Group will be better placed, ready to leverage its brand value when the market returns.
Shares still looking cheap
RBC Capital Markets said they expected investors might view the results announcement cynically, and said first-half earnings were about a 17% miss against consensus estimates.
The broker went on to say:
Management are expecting FY26 earnings to be down 9-14% however, this update is closer to a 16-21% downgrade versus consensus expectations of $38 million. The downgrade is even larger when considering that Locomote, a recent acquisition, is expected to generate underlying EBITDA losses of $600-900k in the second half of 2026 – these losses have been excluded from guidance.
RBC has a price target of $1.30 on Webjet shares.
