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May, 2024

Webjet explores demerger of leading divisions as it reports record FY24 results

Webjet, the online travel agency, has confirmed it is exploring a separation of its two leading divisions, WebBeds and Webjet B2C via a demerger.

The ASX-listed group is exploring a separation of its two leading travel divisions, WebBeds, the global bedbanks business and Webjet B2C, which includes Webjet OTA, GoSee and Trip Ninja, via a demerger. If pursued and completed, this move will result in two standalone ASX-listed companies, each holding leadership positions in their respective industries.

According to WebJet, the strategic move reflects the divergent growth opportunities available to the respective businesses and the belief that independent capital structures will enable both divisions to make optimal investment decisions.

“Having carefully weighed up the arguments for and against a demerger, the Board sees significant value enhancement through a potential separation of our two industry leading businesses and brands,” said Webjet Limited Chair, Roger Sharp. He added both Webjet B2C and WebBeds will be well positioned to offer enhanced solutions to their respective customer bases in an increasingly complex travel booking ecosystem.

If a demerger is implemented, both divisions are expected to benefit from separate management teams, independent capital structures, a stronger ability to respond to the evolving travel industry, and access to new investors. Any potential transaction is expected to complete during Webjet Limited’s FY25 financial year.

Webjet Limited Managing Director John Guscic noted the B2C and B2B divisions are increasingly diverging and have minimal operational co-dependence.

“B2C has seen the structural shift to online accelerate since the pandemic, leading to significant growth in market share and we continue to see significant growth opportunities for WebBeds as a genuine player of global scale,” he said.

The news came as Webjet revealed record FY24 results with Bookings, TTV, Revenue and EBITDA all materially ahead of

FY24 underlying EBITDA hit $188.1 million, an increase of 40% over FY23, while underlying NPAT hit $128.4 million. Bookings were up 21% to 8.7 million; TTV was up 29% to $5.6 billion; and Revenue was up 29% to $471.5 million.

WebBeds TTV was a solid performer, chalking up $4 billion, with all key metrics significantly ahead of FY23 levels including booking volumes (26% higher than FY23), FY24 EBITDA of $162.4 million (up 39% on FY23) and EBITDA margin of 49.5%.

Another noted highlight was Webjet OTA, which continues to see material increase in international market share and also had strong growth over FY23 for all key metrics. FY24 EBITDA hit $54.2 million (up 25% on FY23), while EBITDA margin is at record levels (44.7%).

WebJet also cited a strong start to FY25 trading and earnings. The ASX-listed group is in a strong capital position, with $116 million cash generated in the period and $630 million in Total Cash in the bank.

“FY24 was a fantastic year for the Company with record earnings that were well ahead of last year. The key driver was the performance of our WebBeds business which continues to go from strength to strength,” said Guscic. He further added Webjet has a strong track record of delivering organic growth and believes they can grow at least twice the underlying market by focusing on their three pillars of growth.