Australian online travel group Webjet Ltd. reported a stronger than expected 134 percent rise in annual profit.

Published: 06 Aug 2008

Australian online travel group Webjet Ltd. reported a stronger than expected 134 percent rise in annual profit.

Webjet MD David Clarke said the 134 percent increase in net profit after tax includes a one-off boost of $2.7 million (US$2.4 million) tax credit. Excluding that gain, net profit was up 68 percent to $6.7 million (US$6.15 million).

Income, excluding interest, of $23.5 million (US$21.6 million) was 48 percent up versus 2007. Total costs for the full year, inclusive of marketing, were $15.6 million, an increase of 28 percent compared to the year-over-year gain of 48 percent in operating income.

The group considers that the general and macro environment for 2008-09 will be significantly restrained, relative to 2007-08, by the impact of higher interest rates, higher oil prices and the current downturn in broad consumer confidence which is adversely affecting the overall retail market in Australia.

The buoyant overall travel demand environment of 2007-08 is likely to be replaced with a more measured expectation of consumer expenditure and the nature of that expenditure on travel. Specifically, as a reflection of reduced demand and increased airline capacity, it is likely that the unit value of travel will decrease and consumers will aggressively hunt bargains, the company added.

"If recent USA experience is an appropriate guide, it is likely that aggregation sites, such as Webjet, subject to their marketing footprint, will gain market share, i.e. all the bargains in one place. More than ever, travel product and distribution brands and their associated market footprint will be a key driver and Webjet intends in this environment, subject to a TTV control percentage of not greater than two percent, to maintain an aggressive marketing position," stated the company.

Webjet expects profit growth for 2008-09 to exceed 12 percent.