2001

Strong sales and offshore profits boost Flight Centre Limited

Flight Centre Limited is set to report another year of increased profit before tax, on the back of strong performances offshore and record sales during the 2000-2001 fiscal year. In a preliminary announcement released today, Australia’s leading travel retailer said it expected to continue its ongoing growth record, despite the difficult trading conditions in the domestic economy during the past 12 months. Flight Centre Limited chairman Norm Fussell said, while it was still too early to quantify the exact result, the company expected to record a global sales increase of about 24% on the previous year’s record figures. Mr Fussell said it appeared the company would achieve a pre-tax profit increase of between 7% and 9%, in a year when the travel industry was confronted with increased costs and decreased margins. He repeated comments made to the market in May that profit growth had been slower than the company would have liked and said results for June, a traditionally strong month, had not improved on the record figures achieved in the corresponding month in 1999-2000. "Conditions in Australia during the past 12 months have been tough, but the results from overseas have been very good", Mr Fussell said. "Our success off-shore means we expect almost one third of the group’s pre-tax profit for the year to come from outside of Australia. "Canada, the United Kingdom and South Africa have all performed strongly, New Zealand has enjoyed a solid year and there have recently been some encouraging signs for the company in the United States. "The US has been performing well to budget in the past six months, after losses in the first half were higher than expected, and results are steadily improving on a month-on-month basis. Flight Centre Limited chief executive officer Graham Turner said the overseas results were encouraging, but the company’s domestic performance had not met initial expectations. Mr Turner said the domestic market was affected by a number of factors, including the falling Australian dollar, the introduction of the GST, the Sydney Olympics and the launch of two new national airlines, which gave the company a considerable amount of non-profitable business. He said the company had also incurred significant costs associated with its on-line business, Flight Centre Direct, and its wholesale arm, Infinity Holidays. Operations in the two businesses were now working better and both were expected to at least break even during the next 12 months. "We believe that most of the issues that adversely affected results in Australia last year are now behind us and can set our sights on a stronger 2001-2002", he said. Mr Turner said the company had also boosted its global retail presence by 30% during 2000-2001, from 553 stores at June 30, 2000 to 719 at June 30, 2001.