Flight Centre on track for profit growth

Flight Centre on track for profit growth
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Flight Centre is on track to hit profit growth targets, with Australia again one its strongest performing markets.

Managing director Graham Turner said trading in the first four months of the financial year was “promising” but stressed it was still early days.

Currency fluctuations have not impacted outbound travel from Australia, he added.

The retailer has targeted a rise in pre-tax profit of 8% to 12% in 2013/14 which, if achieved, will see the firm hit a PBT of between $370 million and $385m.

“Trading results so far are promising and indicate that we will be tracking within our targeted range in PBT terms at the end of October,” Turner told shareholders at Flight Centre’s annual general meeting (AGM) in Brisbane this morning. “Total Transactional Value (TTV) has also been solid.

“It is, of course, very early days and it is premature to extrapolate current growth rates over the full year.

“As we have said before, comparatives will become more difficult as the year progresses, so maintaining the current trajectory will become more challenging.”

Australia, UK and New Zealand are the strongest performers in the financial year so far, Turner said.

He added that fluctuating exchange rates “do not seem to have affected Australian outbound travel”.

“Results from both our leisure and corporate businesses in Australia have improved year-on-year with leisure currently recording stronger growth, continuing the trend that was evident during the second half of last year,” Turner told the AGM.

Shareholders heard that Flight Centre’s South Africa operation was showing solid growth, while the US and Canada were ahead of last year thanks largely to the corporate travel business.

Singapore, Greater China and Dubai were performing well and while India was profitable it “remained a challenge”.

Flight Centre warned there could be goodwill impairment in India and the US and it could write down some legacy IT programs during 2013/14.

Meanwhile, Turner again flagged that growth would largely be organic although strategic acquisitions could be on the cards.

“Acquisitions are likely to be capital-light businesses that can be vertically integrated, without the company taking on significant physical assets,” he said.

Among the opportunities included hotel management arrangements or joint ventures, destination management companies and wholesale tour operations.

The latter follows the “success we are now having with Back-Roads Touring”, Turner said.

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