Airliner Virgin Australia Holdings Ltd (ASX:VAH), delivered improved results for the half year ended 31st December 2015. The result represented growth in all segments.
Revenue up 11.8%
Revenue for the period was $2.7 billion, an 11.8% expansion to the PCP. The airliner also recorded their strongest profit after tax since the H12010, of $62.5 million, a $110.3 million improvement to the loss incurred in the prior corresponding period.
These improved results for the airliner were supported by growth in each of their respective segments. Virgin Australia Domestic recording an Underlying EBIT of $130 million, equating to 86.5% growth to the PCP. The Group’s international counterpart’s Underlying EBIT improved by $8.7 million, despite the $19.2 million impact associated from the Bali volcanic activity. Moreover, Tigerair Australia delivered its highest Underlying EBIT of $13.9 million, resulting in 17.8% growth to the PCP. Alongside, Velocity recorded revenue of $154.8 million, representing 26.3% growth to the PCP.
The airliner’s net benefit from changes in the price of oil, whilst accounting for the impacts of foreign exchange rates, was $33.8 million.
Group CEO John Borghetti has indicated that the benefits from lower oil prices should continue: “Based on our current hedging position and market rates, the Group expects to see a further net benefit in the second half of the year.”
Torque Solutions Acquired for $4.8 Million
On the 1st of July 2015, the group acquired 100% of the shares, along with the voting interests in Data servicing firm Torque Solutions (Australia) Pty Ltd for $4.8 million. With the payment being composed of cash and convertible notes, the net cash outflow was $2.3 million.
The acquisition was established to support and diversify the Velocity business portfolio. Since the acquisition, Torque has contributed revenue of $1.4 million, along with a net loss after tax of $0.2 million to the Group’s half-yearly results.
Cash Balance Reduced 17.6%
The Group’s financial leverage decreased to 5.7x during the period, from 6.8x in the PCP. The airliner is targeting a financial leverage of 4.0x-4.5x by the end of FY17.
As at the 31st December 2015, total cash balance was $906.7 million, a 17.6% decrease to the PCP.
Virgin Australia slightly contracted upon open, with VAH declining approximately 0.6% (As at 10.09am AEDT), to approximately $0.48.
Author: Ben Khouri
Feb 11, 2016
Ben Khouri is a financial editor for Wise-Owl with a particular focus on the top ASX 300 companies. Having a vast background in economics and finance, Ben provides financial commentary & analysis as well as global market updates, which guide investors in devising investment strategies. Ben specialises in analysing economic data and global events from around the world and examines the impacts they have on the major equity markets.