News

Webjet forecasts flat year as expansion continues

Webjet said it does not expect to see any improvement in earnings in 2014 as it continues to reposition and expand its brands.

The online retailer estimated that earnings before interest and tax (EBITDA) will hit $21.5 million, marginally down on the normalised result of $21.6m in 2013.

It said the forecast takes into account “development and transformation” costs of $3m.

Webjet reported a net profit after tax of $6.5m in 2012/13, down 52% from the previous year's $13.6m.

The profit guidance emerged at Webjet’s AGM as management laid down the gauntlet to bricks and mortar agents by preparing to roll out dynamic packaging technology.

While packages have historically been the stronghold of traditional agents, Webjet said a migration to online is already taking place in North America and Europe.

The firm predicted packaging “could potentially be as big as our flight business”.

“It is the logical extension of aggregation of air and hotel supply with underlying sophisticated technology,” it said.

Meanwhile, Webjet said Zuji, which it acquired earlier this year, will undergo major brand and strategic development in January.

Zuji Australia’s unprofitable business streams have been eliminated, it said, as it stressed the focus would be on the bottom line rather than “superficial TTV (Total Transactional Value) of unprofitable components”.

“All business development and marketing opportunities focus on repeat business and long term customer relationships,” Webjet said. “[There will be] no brand dilution through affiliates.”

It added that Zuji has been profitable each month since July.

Webjet said Lots of Hotels continues to make money with a current sales rate equivalent to more than $50 million per year.

Lots of Hotels is operating in 12 markets with a further eight expected to be added before June 30.

Webjet said it spend an additional $2m on marketing this financial year.



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