Market Doldrums Hits Growth at Webjet

Growth appears to have slowed at leading Australian OTA, Webjet, which enjoyed a spectacular 2011/12 financial year to June 30 when net profit increased 24%. But MD John Guscic has now warned that the Australian leisure market is in the doldrums and is forecasting profit growth for the current financial year of around 10%.

While Mr Guscic has over the past year made a habit  of downplaying Webjet’s profit growth, this time it looks real.

Last October, for example, Webjet also said annual profit would increase by around 10% but at the same time trumpeted an increase in turnover of 25% during the first quarter.

On this occasion, however, Mr Guscic provided no detail on company’s sales, instead referring to increased marketing and product investment costs.

“The leisure travel market in Australia has exhibited very low growth levels over the last four months at both a unit price level and transaction volume levels where month  by month data has shown declining domestic prices,” Mr Guscic said.

“As these development activities continue in a travel market where the macro level is not exhibiting strong significant growth there has been a concentration on managing for margin in all areas of our activities.”

It’s worth noting that profit growth was just 5% year on year at Webjet in the 10/11 financial year.

Those results were particularly hurt by poor second quarter (from September to December 2010) before sales rebounded.

It will interesting to see if history repeats.

ends.

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