News 2001

6 September
Solid global sales send Flight Centre Limited to $66 million pre-tax profit

Australia's leading travel retailer, Flight Centre Limited, expects to make further international inroads this year, after its offshore operations recorded substantial increases in profit and business numbers during the 2000-2001 fiscal year.

Flight Centre Limited today revealed that strong performances from its offshore businesses had helped it record annual sales of $3 billion and a $66 million pre-tax profit, increases of 25% and 8% respectively on the previous year's result.

The company also announced a $42.9 million after-tax profit, a 6.4% increase on 2000-2001, and a 16.5 cents-a-share fully franked dividend to shareholders, or 27.5 cents for the full year, up 10% on last year. The dividend is payable on October 15 to shareholders on the register at October 1 and is in addition to the 60 cents-a-share special dividend payment that shareholders received in May.

Flight Centre Limited chairman Norm Fussell said while the company's global sales and profit figures were both new records, profit growth was slower than expected because some businesses and areas did not perform to expectations.

Mr Fussell said many of the contributing factors had now been addressed and the company expected significant improvement from two of its loss-making businesses from 2000-2001, wholesaler Infinity Holidays and telesales and web-based division Flight Centre Direct.

He said about one third of Flight Centre Limited's profit had come from the company's established offshore operations in the UK, Canada, South Africa and New Zealand in a year that was marked by significant international expansion. The company's overseas operations were expected to build on that success in 2001-2002.

"The company has posted another record profit in 2000-2001 and continues to invest in its international future by opening more than 70 new stores in New Zealand, Canada, South Africa, the United Kingdom and the United States, as well as 80 in Australia," Mr Fussell said.

"This means that Flight Centre Limited has built a very solid base in these major overseas travel markets and the company expects the benefits to continue to flow through this year and in the future.

"Last year, the Canada, South Africa and United Kingdom operations recorded substantial profit increases, while New Zealand posted a double-digit rise in a relatively flat domestic travel market. The company also opened six new stores in Los Angeles."

Mr Fussell said Flight Centre Limited had also started the new fiscal year in a strong financial position.

"During the 2000-2001 financial year, the company invested almost $34 million in capital expenditure establishing new stores and developing its IT systems for the future. In addition, the company's balance sheet and cash resources are strong, which means Flight Centre Limited is well placed to build on its success in the future."

Flight Centre Limited chief executive officer Graham Turner said operating losses from the United States operation, which was launched in September 1999, were higher than expected at $US3.1 million ($A5.7 million).

"The company anticipates losses from the United States will be $US1.8 million ($A3.5 million) in 2001-2002 and results from the first two months of the year are in line with that expectation," he said.

Mr Turner said the company also expected improvement from its Australian operation, which was affected by several internal and external factors last year, including decreased margins resulting from cheaper airfares.

"Although the Australian performance was disappointing in 2000-2001, the company still recorded strong revenue growth in its largest market," he said. "The business issues that affected Australia negatively last year continue to be addressed and the July-August results have been encouraging."

In terms of sales increases in local currencies for 2000-2001, the company's East Canada operation led the way with an 88% rise, ahead of the United Kingdom (74%), South Africa (49%), West Canada (42%), Australia (17%) and New Zealand (6%).

Sales from the United States increased 336% in comparison to the company's figures from its nine months of trade in 1999-2000.

South Africa recorded the highest percentage profit increase (43%), ahead of West Canada (42%), East Canada (41%), the United Kingdom (21%), New Zealand (13%) and Australia (eight%).

Mr Turner said the company had boosted its global retail presence by 29%, from 553 stores at June 30, 2000 to 712 at June 30, 2001. He said the company expected to open an additional 150 stores in 2001-2002, including 75 overseas.