Flight Centre Travel Group Reports Strong Profit Turnaround

Flight Centre Travel Group (FLT) recorded a strong profit turnaround during FY23.

The diversified global travel company delivered $301.6million in underlying EBITDA for the 12 months to June 30, 2023 – an almost $485million turnaround from FY22’s $183.1million underlying loss.

The result represented a 265% YOY improvement and was above the mid-point in FLT’s upgraded, targeted profit range for FY23 ($295million-$305million).

On a profit before tax (PBT) basis, the company achieved an underlying $106million profit (FY22: $361million loss) and a $70million statutory PBT (FY22: $378million loss).

FLT’s strong profit recovery was underpinned by:

  • A 112% TTV uplift to $22billion (FY22: $10.3billion), FLT’s second strongest result behind FY19 ($23.7billion), in an improved trading climate
  • Efficiency gains, highlighted by a 70bps revenue margin improvement and a recordlow 9.6% underlying cost margin, which together led to improved profit margin; and
  • Solid cash generation and cash flow to fund business re-investment and pave the way for an 18 cents per share fully franked final dividend for shareholders. A new capital management policy, effective from FY24, has also been introduced.

The company’s managing director, Graham Turner observed that: “After an incredibly challenging period, we are pleased to report material profit and sales uplifts.in improved conditions during FY23, leading to stronger shareholder returns.”

Turner said that: “Our $485million profit turnaround exceeded our initial expectations as our diverse global business benefitted from the removal of unprecedented restrictions that were imposed on travellers for some two-and-a-half years and from the strategies that we implemented to preserve our key assets and ensure we re-emerged in a position of strength.”

He also noted that: “Sales more than doubled group-wide, as our leisure and corporate divisions both delivered more than $10billion in annual TTV for the first time.”

And he added that: “Corporate TTV reached $11billion, comfortably surpassing the previous record and broader sector recovery, as our business consolidated its position as a global industry leader with a compelling customer offering across two key brands – FCM and Corporate Traveller.”

Turner continued: “Our transformed leisure business is also on a steep TTV recovery trajectory, with several businesses, including online and the independent agency network, delivering record sales.”

“Group-wide,” he pointed out that: “we have successfully executed our key strategies, which has led to ongoing cost discipline, strong productivity and efficiency gains underlined by higher revenue margin and record low-cost margin. This in turn has delivered stronger profit margin and underlying earnings per share growth to 36.9 cents, compared to -135.2 cents during FY22.”

Said Turner: “Importantly, we have reinforced our balance sheet and re-established foundations for stronger short and long-term shareholder returns, which is a priority, as evidenced by the new capital management policy we have outlined today and the fully franked 18 cents-pershare FY23 final dividend, which has taken total shareholder returns for the year to 10.8%.”

And he concluded: “Looking ahead to FY24, we are well placed to capitalise on opportunities that will arise as industry recovery continues. Already, we have seen further solid TTV and profit growth in early trading in a resilient travel market that seems to be holding up reasonably well compared to other sectors.”