2002

Flight Centre Limited posts $20.9 million half-year profit

Thursday, 28 February 2002

An improved performance from Flight Centre Limited's Australian businesses has helped the company post a 20% increase in after-tax profit for the first half of the 2001-2002 fiscal year. Australia's leading travel retailer today announced an audited $20.9 million operating profit after-tax for the six months to December 31, 2001, compared to $17.4 million in the corresponding period. Flight Centre Limited's pre-tax profit jumped 10.2% from $27.8 million to $30.7 million in the half-year and global revenue increased 12%, from $1.4 billion to $1.6 billion. The company also announced a fully franked half-year dividend for shareholders of 12.5 cents a share, up from 11 cents in the corresponding period, payable on April 11 to shareholders on the register at March 13. Flight Centre Limited chairman Norman Fussell said a reduction in the Australian corporate tax rate from 34% to 30% and tax benefits associated with the company's losses in the United States, its newest international operation, had contributed to the improved after-tax profit result. Mr Fussell said the overall results were encouraging, as the travel market had been greatly affected by a number of factors, including September 11's impact on North American aviation, Ansett's demise in Australia, the loss of Canadian carrier Canada 3000 and the consolidation of travel agencies globally. "Our results for the six months are pleasing, given that many businesses have struggled to improve on their previous figures in the current climate," he said. "At a time when the travel industry has faced some of its toughest challenges, we have expanded our international operations to 859 shops and businesses and have continued our growth record in profits and sales. "Much of the credit for this must go to our systems, our service and, in particular, our people. "It is also pleasing to see major improvements in Australia, our largest operation, during the first half of 2001-2002 with profits and revenue both significantly up on the corresponding period. "In addition, two Australian businesses that did not perform to expectation last year, Infinity Holidays and on-line operation Flight Centre Direct, have improved considerably. Infinity is now consistently profitable and Flight Centre Direct is in a position where it could break even on a month to month basis by the end of this financial year." Flight Centre Limited chief executive officer Graham Turner said, while the half-year figures were encouraging, it was too early to predict the company's full-year results. Mr Turner said global travel continued to be adversely affected by world events and probably would not fully recover until the middle of this year. He said the company's businesses in Canada and the United States had been hardest hit. "The events of September 11 have slowed our progress in the United States and consequently results are not as strong as they could have been," he said. "While we have posted a loss, the final figure represents a 25% improvement on the corresponding period and revenue has increased more than 50% to $18 million. "Our operations in both West and East Canada posted small losses, as trade was severely affected by Canada 3000's demise and events in the United States.Revenue increased by more than 15% in both regions and there have been some encouraging signs recently, so we hope the operations will bounce back in the second half to post full year results similar to last year. "Elsewhere in the world, our South African operation posted a four% pre-tax profit increase in local currency, although the relatively weak Rand has meant the half year profit is slightly down on last year when converted into Australian dollars. "Australia and New Zealand continue to perform solidly with pre-tax profit increases of 10% and 13% respectively. The United Kingdom has also enjoyed a very strong half-year, with total revenue up almost 49% to $126 million and pre-tax profit up 160%." Mr Turner said the company's recommended takeover of publicly-listed corporate travel specialist ITG Limited was progressing and Flight Centre Limited now had a relevant interest in more than 29% of ITG's shares. He said full details on the offer, which is supported by ITG's independent directors, had been sent to ITG shareholders, with Flight Centre Limited's Bidder's Statement posted on February 11 and ITG's Target's Statement distributed on February 26. Flight Centre Limited's recommended offer is scheduled to close on March 12.