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UPDATE 1-Australia's Webjet shares slide on weak forecast
November 22, 2017 / 1:02 AM / a month ago

UPDATE 1-Australia's Webjet shares slide on weak forecast

(Adds analyst comment, details about JacTravel deal)

By Chandini Monnappa

Nov 22 (Reuters) - Australia’s Webjet Ltd on Wednesday said it expected negative cash flow in the first half of fiscal 2018 owing to a one-off acquisition cost incurred from buying European travel business JacTravel, sending its shares lower.

The largest online travel agency in Australia and New Zealand announced the acquisition of JacTravel in August for an enterprise value of 200 million pounds ($265.02 million).

The company said it expected annual earnings before interest, taxes, depreciation and amortisation of about A$80 million ($60.70 million), below analysts’ estimates.

Shares of the company slumped as much as 13.6 percent in its biggest intra-day percentage fall in five years.

“The shares were over-valued. There were execution problems potentially with all the acquisitions they were making,” Blue Ocean Equities analyst Mathan Somasundaram said.

“In the recent update they have given an EBITDA guidance of around A$80 million for next year and the market is sitting at around A$93 million. So that is a good 10 plus percent downgrade.”

$1 = 1.3180 Australian dollars $1 = 0.7547 pounds Reporting by Chandini Monnappa in Bengaluru; Additional reporting by Aditya Soni; Editing by Stephen Coates

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