2003

Flight Centre Limited extends growth record

Friday, 29 August 2003

Flight Centre Limited has extended its record of achieving improved financial results, despite the difficulties the global travel industry faced during the 2002-2003 fiscal year. In releasing its audited accounts for the year to June 30, 2003, the travel retailer today revealed that it had surpassed its record achievements of 2001-2002 in the key areas of revenue, total transaction value and profit, with pre-tax results topping $100 million for the first time. Flight Centre Limited chairman Norman Fussell said the company had also continued to grow its business, building a solid foundation for the future by expanding its retail presence through organic growth and strategic acquisitions. "Despite the many challenges that arose, we have maintained our record of achieving year-on-year growth and that is a great credit to our 5800 people throughout the world," Mr Fussell said. "Profit both before and after tax increased by 13% on the previous year, with pre-tax profit reaching $102.3 million and after-tax profit being $70 million. "Total transaction value for the year increased 26% to $4.6 billion, while total revenue increased 30% to $626 million. "At June 30, we had 1054 stores and 209 businesses, including a significant online presence that continues to generate enquiry and sales." Mr Fussell said the company's profit result, while down on the 47% increase reported in the first half of the year, reflected a reasonable trading performance given the challenges that arose during the six months to June 30. Challenges included war in Iraq, terrorism concerns, an increase in low-cost airfares, airlines reducing capacity and, therefore, availability and the SARS outbreak late in the year. The company has declared a final dividend of 25 cents per share, taking the full-year dividend to 43.5 cents per share, a 16% increase on 2001-2002. The final dividend is payable on October 17 to shareholders on the register on September 26. Basic earnings per share for 2002-2003 reached 77 cents, an increase of 7% on the previous year. Strong growth in the first half underpinned Flight Centre Limited's results, with the slowdown in profit growth the company experienced in the third quarter continuing into the last three months of the year. In the three months to June 30, 2003, revenue and total transaction value increased by 25% and 15% respectively ($191 million and $1.3 billion), compared to the previous corresponding quarter. Profit before tax for the quarter was $33.5 million, a similar result to 2001-2002, with the after tax result $22.9 million, down one%. "The second half of 2001-2002 was an exceptionally strong period as the market rebounded after the downturn that followed September 11, 2001," Mr Fussell said. "By comparison, there was considerable uncertainty in the world in the corresponding period of 2002-2003 and that impacted on trading conditions." Flight Centre Limited chief executive officer Shane Flynn said the company's Australian, New Zealand and South African operations were the key contributors in 2002-2003. "New Zealand and South Africa have performed very well and, in terms of Australian dollars, have achieved profit increases of almost 20% and 76% respectively," he said. "The overall Australian operation has recorded growth, but performances were mixed, with some of the best results coming from Flight Centre in New South Wales and ITG, the corporate travel business we acquired in 2001-2002." Elsewhere overseas, profits from both East and West Canada were similar to the previous year, as were losses from the United States retail operations. "There are some encouraging signs in the United States, with Corporate Traveller Brand posting a profit for the year," Mr Flynn said. "We have also seen a decrease in staff turnover and, at shop level, almost all of our businesses traded profitably in June." In the United Kingdom, Flight Centre Limited opened 20 new stores, in addition to the 42 outlets that were welcomed following the acquisition of corporate travel specialist Britannic Travel. The overall UK business did not, however, meet company expectations with the war in Iraq, the cost of expansion and the performance of non-retail operations combining to affect profit results. Improvement in the United Kingdom is expected in 2003-2004, as many issues that hindered travel business in 2002-2003 have passed. "In the UK, Britannic made a reasonable financial contribution to the company's overall results, given the prevailing economic climate in the second-half," Mr Flynn said. Looking to the year ahead, Mr Flynn said, while it was far too early in the year to speculate, he expected profit growth of 15 to 20%. He said the company could have a better indication by the time of its Annual General Meeting on October 30. At June 30, Flight Centre Limited's leisure and corporate travel operations included 608 shops in Australia, 121 in New Zealand, 122 in the United Kingdom, 83 in South Africa, 54 in East Canada, 46 in West Canada, 15 in the United States and five in Hong Kong.