Flight Centre placed to capitalise on profits

In unsurprising news, Flight Centre has once again smashed it in the financial department, lifting its profits by nearly a quarter.

In large thanks to its record global sales and strong earnings growth from its offshore business, the mighty agency’s net profit climbed 24% to $256.55 million in the year to June 30. Total revenues rose 6.8% to hit a whopping $2.4 billion.

Flight Centre recorded new Total Transaction Value milestones in all 10 countries, and while statutory profits were at record heights, a slowdown in the Aussie travel market and losses from the group’s Canadian business saw underlying profits slip 3.4%.

Managing director Graham Turner said Flight Centre performed well in several key regions, including the USA and UK, on top of hitting a number of milestones globally.

“In TTV terms, we achieved our fifth consecutive year of record results and our nineteenth year-on-year increase in 20 years as a public company,” Skroo said.

“We increased TTV in dollar terms by $1.55 billion globally and by $445 million in Australia, despite a reasonably flat trading environment.

“While this record sales result in Australia didn’t translate to a record profit, the Australian business generated more than $250 billion in EBIT for the third consecutive year and was again the company’s main profit and sales generator.

“We believe we are at the beginning of a Golden Era of Travel and are building the foundations that will allow us to seize this opportunity.”

“To maintain margins and improve results, we have become more diverse, broadened our product mix, integrated vertically and tapped into new revenue streams.”

Skroo added that as a result of this, the agency was now a major player in niche sectors that are having a moment in Aussie travel, with Student Flights, Travel Money and Cruiseabout brands turning over almost $1.2 billion in the past year.

The agency’s blended offering was enhanced with chat functionality expanded, growth in the 24/7 workforce and teams created to contact online customers and correct the mistakes that are commonly made with online bookings.

In terms of growth, sales staff numbers increased 6.3% to 14, 433 and shop and business numbers jumped by more than 5% to 2825.

Asia and the Middle East were Flight Centre’s fastest growing operations, with shop and business numbers increasing by more than 30%.

“Overall, Flight Centre has started the new year reasonably and, based on year-to-date trading results, is currently tracking broadly in line with its annual PBT growth target,” Skroo added.

“In Australia, consumer confidence remains relatively subdued but we are seeing positive momentum in leisure travel, with customer enquiry currently tracking above target and sales in the key sectors continuing to grow.”

Income margins were lower, reflecting a number of factors including lower commission earnings in Australia as leisure consultants worked to stimulate demand, and a slight change in the product mix brought about by the rapid growth in corporate travel.

Ongoing growth in key leisure and corporate sectors also saw Flight Centre’s corporate brands increase turnover by more than 16% to $5.7 billion without significant acquisitions.

Shares in the company were $1.30, or four per cent, higher at $33.59 at 1042 AEST.

“Travellers will be the winners, but Flight Centre is also well placed to capitalise given its global presence, omni-channel capacilities and brand diversity,” Skroo added.

“The company also has an extremely strong balance sheet and a clear strategic blueprint for the future.”

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