Flight Centre shows signs of recovery

By Hannah Edensor

Flight Centre Travel Group has reported some positive signs of growth in the half yearly report for the six months to December 31 2014.

The company saw an overall profit of $141 million, which, despite a number of positive results, still marked a decline of 9%, with the underlying pre-tax profit lower than the record for the previous corresponding period.

The $141 million profit results consisted of a $137.6 million PBT from Flight Centre’s underlying business, as well as a $3.4 million contribution from Top Deck, which was acquired in August 2014.

The global total transaction value jumped up 8.8% to $8.138 billion, and revenue also rose by 4.6% to $1.103 billion.

The company said the optimistic aspects of the report included a solid number of customer inquiries within its key leisure brands, good sales results at recent travel expos in Australia, record corporate account wins, market share growth in a number of sectors and a new round of airfare discounting.

Revenue growth slowed in the six month period, more so than normal for the company, with this largely put down to lower gross margins in Australia and Canada.

Flight Centre founder and managing director Graham Turner said Australia’s outlook is unclear, with the company predicting a bit of a comeback in 2015.

“We anticipate some recovery as the year progresses and as travellers start to take advantage of the cheap international flights that we are seeing in this golden era for travel,” Turner said.

“We are now heading into what is normally a peak booking period and there is a chance to achieve accelerated growth, given the fourth quarter last year was a comparatively weaker period in Australia.”

Despite the negative aspects, Flight Centre’s shop and business numbers jumped by 4% to 2759 for 2014, with Flight Centre seeing almost half of its global network heading abroad to locations outside of Australia.

The investments within this period for the company included the joint ventures with Top Deck and Buffalo Tours, with the latter now running operations on the ground in Thailand, Cambodia and Laos for Flight Centre.

Reports also suggest expansions into other markets for Buffalo Tours, including Bali, Hong Kong, Malaysia, Singapore and China, will pop up in the near future.

A fall in the Aussie dollar and has led to a lower demand for outbound international travel, however Turner said that to date, this had not resulted in any noticeable changes in Flight Centre’s product mix down under.

The company is paying a 55c per share fully franked interim dividend, and says is on track to achieving a full year pre-tax result of between $360 million and $390 million.

The company said it aimed to grow its global sales network gradually by 5% to 7% this financial year, as it takes its operations within existing markets and expands into new global territories.

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