Flight Centre trebles profit on 'resilient' travel spending
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The news: Flight Centre Group met consensus forecasts after trebling profit in the 2024 financial year.
The news: The travel agency reported profit before tax (PBT) of $320.4 million, up from $106.2 million in FY23 and 1.2% ahead of consensus estimates, arriving at the mid-point of its reduced guidance range of $316 million to $324 million.
Total transaction volumes (TTV) grew 8.2% year on year to $23.7 billion, edging above its FY19 peak. Total revenue rose 20.9% to $2.8 billion while underlying EBITDA increased 58.6% to $478.5 million.
Flight Centre declared a total dividend of 40 cents per share, up from 18 cents a year earlier.
The company said it expects capital expenditure to reach $100 million in FY25, with around 75% invested in technology and systems. It also plans to open around 35 new leisure travel shops globally, including 18 Travel Money outlets.
The group expects the travel industry to return to normal growth levels of 4% to 5% in the upcoming year, as it reaffirmed its 2% PBT margin target.
The context: Flight Centre said that despite TTV reaching its record level, the growth rate was adversely affected by "significant" airfare deflation, business closures and a flat trading climate in the global corporate sector late in the year.
The company noted that cost of living pressures have curbed discretionary spending but travel has generally outperformed other sectors.
What they said: RBC Capital Markets analyst Wei-Weng Chen described the result as "messy and unnecessarily convoluted", with headline figures appearing as a miss to average forecasts due to the company's accounting methodology.
"In our view, while the result was ultimately in-line, [Flight Centre]'s choice of reporting methodology may put the stock at risk of quant selling today on an 'EBITDA miss'", he said.
Flight Centre managing director Graham Turner said: "In an uncertain macro-economic and geopolitical climate, our business and the industry in general continued to grow — once again highlighting the sector's resilience and our strength as a diversified global travel company".
The sources: ASX announcement, RBC Capital Markets research
