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FLIGHT Centre Limited (FLT) has upgraded its profit guidance for the 2010/11 financial year, listing trading profit before tax at between $243 million and $247 million.
The result includes about $4 million in one-off donations that were announced early in the second half to help those affected by the tragic events in Queensland and Christchurch.
FLT’s result is above the $220M-$240m target outlined previously and represents 22.5 – 24.5 per cent growth on the $198.5 million 2009/2010 result.
Managing director Graham Turner (pictured) says the result will also surpass the $201 million Profit Before Tax (PBT), achieved during 2007/08, which was previously the company’s record year.
“This result is more than 20 per cent higher than our previous record. For the first time, we have generated profits in each of the 10 countries we operate wholly-owned businesses in,” he says.
“This includes the United States, which has achieved its first full year profit in the 12 years that FLT has operated in the country.”
FLT’s record profit was achieved despite the effects of the Queensland floods and cyclones, the Christchurch earthquakes, the tsunami in Japan and the short-term disruptions to air travel following the recent ash clouds.
Results have generally improved in both the corporate and leisure travel sectors, with strongest growth recorded in both the corporate and leisure travel sectors, with strongest growth recorded in corporate.
Leisure customers have been more discerning during 2010/11, but have continued to travel in solid numbers. In Australia, domestic leisure tourism has not yet rebounded, but this has been offset by solid growth in international ticket numbers.
“The company hasn’t experienced the soft demand that retailers in some other sectors have reported – this is partly a reflection of the product we sell,” says Turner.
“A holiday isn’t considered discretionary spending – taking time out for one or two extended breaks in Australia or overseas during a long working year is an annual ritual.
“In the current climate, leisure customers are finding compelling reasons to take-off overseas, with international airfares remaining highly affordable and the strong dollar delivering a secondary benefit.”
In the US, retail and wholesale results were below initial expectations, but the corporate travel and global product buying businesses performed strongly.
Despite the improved bottom-line performance for a second successive year in the US, FLT believes the non-cash goodwill adjustment that it has flagged previously in relation to the acquired liberty business is likely. The size of any adjustment will be disclosed if and when it’s finalised.
Turner says the company will target further profit growth in all markets during 2011/12.
“As we saw during the second half of 2010/11, challenges are sure to arise, but we start the New Year (FY) with strong foundations and with strategies in place to drive further improvements,” he says.
“Assuming normal trading conditions, we will initially target 10 per cent profit and total transaction volume growth.”
FLT will release audited 2010/11 accounts and will provide additional commentary on its performance and outlook on August 23, 2011.
FLT shares are trading at $21.20.
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