Flight Centre Travel Group (FLT) has announced its end of year result for FY19 with a profit of $343.1m – down 10.8% on the previous record financial year.
After downgrading profit predictions by more than 14 per cent in April because of lower consumer confidence and disruption to its business, the travel group’s full-year results say they were largely in line with expectations.
Speaking about the results, managing director Graham ‘Skroo’ Turner said: “While we were disappointed that our $343.1million underlying profit was below our record FY18 result, we can be pleased with our achievements in some important areas and with some of the progress towards our longer-term goals.
“In any given year, TTV growth is crucial and it’s pleasing to report another milestone result almost $2b higher than our previous record, particularly in light of the challenging conditions in key markets like the UK, where Brexit is causing uncertainty, and Australia, where consumer confidence and leisure market growth appear to be reasonably subdued.”
Mr Turner also cited, the strength and ongoing growth potential of our corporate business, the potential of FCTG’s globalisation and the groups’ ability to evolve to capitalise on new opportunities as optimistic points of note for the year ahead.
“There are, of course, challenges to overcome within the Australian leisure business, which remains very important to us despite the emergence of other businesses that are capable of driving overall growth. Aside from market conditions, we believe these challenges are largely within our control and we are working to address the issues.”
Flight Centre Travel Group managing director Graham ‘Skroo’ Turner
Despite the lower result announcement, investors looked positively on the group with shares rising 7.53 per cent to $47.14 on Thursday.
Here’s the breakdown of highlights and the outlook ahead.
What you need to know about FY19
- 30 Australian retail outlets closed during the course of the year, with an additional 30 to be converted to either Travel Associates or the new youth-focused Universal Traveller brand, depending on the shop’s location and customer base
- 30-40 leisure shops shifted to better sites
- 200+ sales consultants were added to Flight Centre brand over the course of the year to ensure shops are appropriately staffed and to return the network to optimum staffing levels (about 5200 people), following a reduction in recent months
- Brand consolidation, which saw Escape Travel and Cruiseabout closed during FY18 and about 20% of FLT’s Australian leisure workforce relocated to new brands was attributed to the lower result
- An ongoing leisure network and sales force review, which is close to being finalised and has identified rationalisation and rebranding opportunities, along with growth opportunities in some areas that continue to perform well
- Flight Centre’s specialist divisions focussing on small corporate accounts (Flight Centre Business Travel), group travel, round-the-world airfares, cruise, and first- and business class- flights performed well, generating about $430 million in TTV
- Flight Centre will pay a 98c final dividend to shareholders, compared to $1.07 last year
What’s the FY20 outlook?
- FLT is working towards a 2025 vision across its three core divisions of leisure, corporate and at-destination travel
- ln Australia, New Zealand and South Africa, the Flight Centre brand will remain a major mass-market player with high market share, whereas, in the USA, Canada, and the UK, the company will take a more specialised approach and will target key market segments
- Flight Centre will look to boost its Aussie leisure business through a targeted brand improvement program called “FC 2.0”, which is currently underway
- The group say the “FC 2.0” program will deliver a new membership model focused on omnichannel benefits and personalisation; product and pricing initiatives to improve the use of big data across the business; self-service capabilities to make it easier for customers to engage with the business; sales technology to better handle, score and direct business leads; and modern strategies to automate, personalise and optimise marketing
- Strong leisure OTA sales growth is again expected during FY20, with flightcentre.com.au’s TTV increasing by more than 50% per month as a result of significant service (technology) improvements and since online booking fees were removed during the FY19 fourth quarter
For the full annual report and more financial information on the Flight Centre Travel Group, click here.
Find out more: www.flightcentre.com.au
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