2003

Flight Centre Limited still on track for year of growth

Thursday, 24 April 2003

Flight Centre Limited is still targeting double digit profit growth in the 2002-2003 fiscal year, despite war and SARS, after performing solidly during the first three quarters. In releasing its unaudited results for the nine months to March 31, 2003, the company today revealed pre and post tax profit increases of 21% in comparison to the corresponding period in 2001-2002. Pre tax profit for the period was $68.8 million, with after tax profit being $47.1 million. Flight Centre Limited also achieved solid sales growth during the three-quarters and recorded a 31% increase in gross ticket sales and other revenue to $3.14 billion*.

Third Quarter Results

A strong first half has underpinned Flight Centre Limited's profit growth so far in 2002-2003, with profit results for the three months to March 31, 2003 down on the corresponding quarter of 2001-2002 because of the effects of the war in Iraq and SARS. Gross ticket sales and other revenue in the third quarter increased 21% in comparison to the corresponding quarter of 2001-2002 to $1.1 billion*. Pre tax profit decreased nine% to $23.9 million and after tax profit decreased 11% to $16 million for a variety of reasons, including costs associated with the company's continuing focus on growth and changes in its international/domestic revenue mix in the second and third quarters. Flight Centre Limited chairman Norman Fussell said while sales had increased in the third quarter, the rate of growth had not matched the company's strong performance in the first six months of the fiscal year. "Our profit figures for the third quarter are slight improvements on the second quarter of this year, but they have not surpassed our achievements in the corresponding three months of 2001-2002, which was a very strong period as the market rebounded from September 11," he said. "The sales increase in the third quarter was encouraging, given that it corresponded first with the war in Iraq and now SARS." Mr Fussell said continued uncertainty in global travel conditions had seen some airlines decrease capacity, a move that had tightened seat availability and could affect Flight Centre Limited's full year results in the company's busiest period. "At this stage our expectation is that our full year result will improve on last year's, with profit growth still targeted to achieve double digits," he said. "We believe this target is within reach, but increased SARS negativity and airline capacity restraint pose new short term risks." Flight Centre Limited managing director Graham Turner said the company had added 299 new stores and businesses to its operations in the past 12 months, an average of almost 25 per month, through strategic acquisitions and organic expansion. In that time, staff numbers had increased by 40%, with Flight Centre Limited now employing more than 5500 people. "We have continued our medium and long term growth strategy by opening new shops and have also increased the average number of consultants per store," he said. "Maintaining our growth in difficult times impacts negatively on current profits, but lays the foundation for the future and enhances our capacity to capitalise on improved market conditions when they prevail." At the end of the March quarter, Flight Centre Limited had 1198 shops and other businesses in Australia, New Zealand, South Africa, the United Kingdom, Canada, the United States and Hong Kong. *These figures have previously been disclosed as revenue. As announced previously, Flight Centre is currently in discussions with the Australian Securities and Investments Commission about whether its revenue should refer to gross sales or the commission, rebates and other amounts that it earns from these sales. This is an accounting standards disclosure issue and does not affect Flight Centre's profit, cashflow or financial strength.