2000

Flight Centre Limited forecasts continued growth

Australia's largest retail travel agency group, Flight Centre Limited, expects to overcome a sluggish tourism market in the first quarter of 2000-2001 to record another year of continued growth. Flight Centre Limited chairman Norman Fussell told shareholders at today's annual general meeting that the company expected to report growth of 20% or more in all sectors of the business, including profitability, in the 2000-2001 fiscal year. He said the company aimed to build on its success of last year, when it sold travel to a value of $2.36 billion (up 31%), increased retail shop numbers by 26% and posted a 44% increase in after-tax profit to $40.3 million. "The company continues to grow strongly in all respects," Mr Fussell said. "It is in a very sound position to further that growth. "In the five years since the company made its initial public offering, sales turnover has grown three-fold, profit (after tax) has grown five-fold, retail shop numbers have grown three-fold, total assets have grown four-fold and, importantly for shareholders, the value of shares has increased by more than 20 times. "The market currently values the company in excess of $1.8 billion. The year to June was the tenth year of consecutive profits and strong year-on-year growth." Mr Fussell repeated comments made earlier this year that, while the company had recorded significant growth in sales in the first quarter, profitability had been affected by a number of factors including domestic airfare discounting, expenditure on the company's United States operations and establishment costs for flightcentre.com. Some of the costs would continue in the months ahead as the company stepped up its efforts to lay a solid foundation for the future, he said. "It is too early to be making any predictions for the full year. We would be very disappointed, however, if growth in all aspects of our business for the full year, including profitability, was not greater than 20%. "The current year will see a large effort associated with the establishment of a much larger platform to handle internet, e-mail and telephone business. "Flight Centre continues to believe that personal customer care is an all-important part of travel. Accordingly, our efforts in this regard, will ensure that personal service is still available in both an internet and telephone environment. "It is necessary that we spend considerable dollars on the provision of adequate services to our clients. Whilst we have had a web site for some time, it had reached the stage where it could not cope with the volume that we were receiving and, likewise, telephone enquiry was surpassing capacity. Flight Centre Limited chief executive officer Graham Turner said new facilities would be established, initially in Sydney, and up to $6 million had been allocated for the setup of shops at Railway Square Sydney, together with a new web page and communications equipment. Mr Turner said retail shops would continue to be the company's "front line marketing effort" and that was reflected in the number of shops growing by 30% in the 12 months to September 2000. He said the company had started the year with a strong balance sheet - cash resources (net of client funds) at year-end totalled $81.3 million and would continue to investigate acquisition opportunities. A fully franked dividend of 25 cents per share was paid for the year (10 cents interim and 15 cents final). The 1998-99 dividend was 18 cents.