Flight Centre Travel Group records strong first half result
THE Flight Centre Travel Group (FLT) has updated its 2018 fiscal year (FY18) guidance after recording strong first half (1H) growth.
In releasing its accounts for the six months to December 31 2017, FLT today revealed record global sales and a $139.4million profit before tax (PBT) for the period.
PBT increased 23.2% compared to the $113.2million underlying* 1H PBT achieved last year (up 27.7% compared to the $109.2million actual result) as total transaction value (TTV) exceeded the record FY17 1H result by more than $800million (8.7%).
Profit during the period was slightly above the targeted 1H range ($120million-$135million), which has prompted FLT to lift its full year guidance to a $360million-$385million underlying PBT, compared to its initial target of a $350million to $380million result.
Managing director Graham Turner said the company had started the year well and had developed solid foundations for FY18.
"Generally, we can be pleased with our performance to date, given that we are tracking at or near record levels in most key financial areas," Mr Turner said.
"We have also made sound progress in executing operational strategies and transformation initiatives that have been developed to fast-track revenue growth and curb costs.
First Half Result Highlights:
- Record TTV globally and in all countries - up 8.7% ($814million) to $10.16billion
- $139.4million PBT - underlying profit up 23.2% and above targeted range, leading to upgraded full year guidance
- Executing key strategies - transformation initiatives underway and gaining traction, 7% productivity growth achieved
- Benefiting from business and geographic diversity - profit in all geographic segments, further corporate travel market-share growth
- Delivering stronger shareholder returns - record equalling 60 cents per share interim dividend, 37% EPS growth
Given the strategic progress we have made and our positive start to the year, we now believe that our profit will finish slightly higher than initially expected and we have adjusted our guidance accordingly.
"The mid-point in this new range - $372.5million - is 13% higher than the underlying FY17 result ($329.5million) and within reach of the record $376.5million underlying PBT that FLT achieved during FY14."
In addition to the record 1H sales and slightly higher than expected PBT, key achievements during the period included:
- Net margin improvement (PBT as a percentage of TTV), as FLT's transformation initiatives and other improvement strategies gained traction
- Productivity growth, with TTV growth significantly outpacing network growth
- Better cost control - cost growth during the 1H was the lowest since the Global Financial Crisis (GFC) of 2009; and
- Enhanced shareholder returns, underpinned by 37% earnings per share growth, a record-equalling interim dividend and a 46% total shareholder return during the 2017 calendar year
In addition, FLT has just completed its new in-store system (GDS) roll-out, with deployment in the Australian and New Zealand leisure businesses bringing the two-and-a-half-year global project to an end.
The system change was the largest deployment undertaken in Australia to date, with almost 7000 leisure consultants migrated onto the new GDS (Sabre in Australia and New Zealand) over a five month period.