WEBJET TAKES $26 MILLION PROFIT ON ZUJI SALE AND REINVESTS IN STARTUP
Written on the 9 November 2016
WEBJET has sold its online travel agent business Zuji to a Hong Kong based travel technology group for $56 million.
That is a $26 million gain on the business' value since 2013, when Webjet (ASX: WEB) bought the company from Travelocity for $30 million.
Of the sale, managing director John Guscic says, "Since acquiring Zuji in March 2013, we have taken out more than $5 million in annual costs and turned the Zuji businesses into profitable operations in a competitive market."
The announcement came alongside market guidance that showed Webjet (ASX: WEB) expects to report $78 million in EBITDA in FY17.
Of the earnings, $60 million will come from existing businesses.
The market has responded well to the announcement, and Webjet is trading up 13.31 per cent at $10.56 per share this morning.
The company has reaffirmed its commitment to Asia through hotels and by backing a new startup called FIT Ruums.
"We remain committed to expanding our presence in Asia through B2B hotels and are delighted to announce that we will be launching FIT Ruums later this month," says Guscic.
"FIT Ruums is a new stuartup which extends our B2B division across key Asian markets."
Webjet says it continues to experience strong bookings growth across its business. It highlighted that both its consumer and business to business groups were outperforming the market.
Guscic says Webjet continues to gain market share in each of its business units.
"In the Australian market, the current unprecedented range and value of air fare deals is encouraging consumer search activity," he says.
"This underlines the power of Webjet's market footprint, which provides our customers with easy, immediate comparisons and increased conversion rates whch are propelling our overall growth, particularly for international bookings.
"In addition, all our B2B businesses continue to demonstrate superior growth in difficult market conditions and business profitability has substantially improved. We remain on track to deliver more than $11 million EBITDA from our B2B businesses during the 2017 financial year."
Webjet's strong result comes just days after Flight Centre (ASX: FLT) was forced to downgrade its guidance for FY17.