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Australian investors are today rushing to buy Web Travel Group (ASX:WEB), pushing the recently-demerged trade brand as much as 14% higher at 1:19am Sydney time – and that’s despite reports the company’s earnings (through bookings) actually got hit pretty hard by European travel troubles in the last few months.
The travel group’s first-half underlying earnings fell 8%, to $70 million, after several challenges like FTI Group’s collapse and less Paris Olympics hype than expected.
Less sporting fans travelled to the 2024 European Championship than anticipated too.
The total dissolution of FTI was a particularly heavy hammer blow: The German-based travel operator was the third-largest across Europe and (though an unrelated entity) had been quite tied to Web Travel’s plans through 2024. After its insolvency was announced at court in Munich, all trips beyond June 4 were scrapped.
Those cancellations, bundled with the Olympics and Euros simply failing to entice as many travellers as predicted, all united into a difficult European storm for Web Travel.
Said Web Travel’s managing director John Guscic, “We underestimated this decline and the extend of the changing market conditions and customers mix… the underlying margins did not recover in August as expected.”
“We also underestimated the incentive payments during August [at the time of the group’s AGM] which were $7.5M higher than planned,” the Web Travel manager added.
The company’s WebBeds sector did record a promising 25% increase in Total Transaction Value though; TTV lifted to $2.6 billion, the company reported today – already a quarter of the way to the group’s bumper $10 billion FY30 targets.
Perhaps the biggest slice of data from Web Travel’s update today that got things moving upwards (and very quickly at that) was the fact its underlying net profit had come in at $52.5 million in the six months through to September 2024; a half-year success tipped higher by how much the group had battled through.
Market interest – which doesn’t look like slowing down through midday trade – was also boosted by news Web Travel is running a $150M share buyback.
On HotCopper forums, some WEB investors were celebrating early today. One praised the “strong cashflows and outstanding balance sheet” while another said they always knew their patience with the group would be rewarded eventually.
At the time of writing, the company was the best ASX 200 performer.
WEB last traded at $4.83 today after its red-hot 14.18% spike.
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