Here’s a company the high dollar is actually helping – Webjet delivers 17% lift in first-half profit
Thursday, February 9, 2012/
Travel and accommodation booking website Webjet has delivered a 17% increase in first-half profits following a disappointing year, becoming one of the few companies to benefit from the rise in the Australian dollar.
The result also comes after official statistics revealed earlier this week that the number of Australians travelling overseas reached 7.8 million.
However, that’s not the company’s biggest concern. Chief executive John Guscic told SmartCompany this morning the difficulty for 2012 will be maintaining its business in the hotel booking market, especially as it competes against much bigger existing sites.
“We’re comfortable and pleased with the hotels business. We believe it reflects a good result, and we’ve had a great run rate so far.”
“This has been a substantial period of development for us, in that we’ve built up a hotel platform. We’ve seen sales double since October, and we want to maintain that growth rate. We need to change customer preferences, as we have some larger and stronger competitors.”
And despite benefiting from the rise in the dollar, Guscic told SmartCompany this morning it’s actually the improvement in the domestic travel market that gave Webjet its positive results.
“The dollar is actually a tertiary concern in our overall business, because the vast majority of our sales come through the sale of domestic tickets. Clearly, it has no impact on that, and that business grew 16%.”
Domestic travellers are spending more willingly, but Guscic also said the dollar has helped Webjet in the international business, as more shoppers head overseas.
“That’s a consequence of two factors. The first is that it’s cheaper to spend time overseas now, and the second is that air fares have fallen because the dollar is so high.”
The dollar reached a new high yesterday of $US1.08c, although it’s now eased to $US1.07c.
“The uplift is foreign owned carriers pricing in their own currency. When they convert to Australian dollar sales, it makes much more for those guys.”
While shoppers may not be spending that money at home, there is a willingness to spend it overseas. The company noted it has seen a rise in short trips to Asia, although all international destinations are on the rise.
The company recorded a 29% rise in total transaction value to $369 million, while its margins rose from 7.6% to 7.9%. Overall, despite the weak trading environment, Guscic says he’s confident with how things are progressing.
“The domestic ticket market has clearly increased. We figure it’s up 3%, and that’s a pretty good result for the overall market.”