Flight Centre posts record $111 million profit

Flight Centre has broken another record by posting a 22 per cent rise in first-half net profit to $111 million as a weaker dollar failed to dampen Australians’ love affair with overseas travel.

Australia’s largest travel agency will pay a 55¢ interim dividend on April 17, up from 46¢ in the prior half.

The latest payout delivers $8.4 million into the hip-pocket of Graham Turner, Flight Centre’s managing director and the company’s largest shareholder.

Despite it breaking records, Flight Centre has stuck to its guidance for this financial year of pre-tax profit of between $370 million and $385 million.

Mr Turner said demand for leisure and corporate travel remained ”reasonably good”, although the company had noticed slowdown in travel by the mining industry due to a greater focus on reducing costs.

Flight Centre reported a 20 per cent rise in profit before tax to $155 million for the six months to December, which included a $9 million one-off gain from its wholesale business. Revenue rose 15 per cent to $1.1 billion for the half.

Mr Turner said fluctuations in the value of the dollar had not stopped Australians from travelling overseas en masse. ”There are no indications that people are going to stop travelling or slow it down,” he said.

Flight Centre, which has been keen to press the point with investors, highlighted government data showing that growth in outbound travel had accelerated during the first half despite a fall in the Australian dollar.

Mr Turner said baby boomers were still spending on overseas travel, and fares were at record lows due to intense competition between Middle Eastern and Asian airlines.

”The airlines have to be on the ball if they want to fill up the big planes. The consumer has never had it so good, which helps us,” he said. ”We go for volume.”

The key driver of its latest earnings was again its Australian business, which posted a 20 per cent rise in pre-tax earnings to $124 million for the half. Its three largest businesses – in Australia, the UK and the US – generated almost 80 per cent of its total transaction value, or the price at which goods and services are sold, in the first half.

But its businesses in the US, which posted a loss, and Canada, failed to meet expectations.

Moelis analyst Todd Guyot said Flight Centre was positioned for ”sustainable low double-digit growth”, emphasising the ”quality of the business model and management”.

Shares in Flight Centre closed up 3 per cent at $1.59 on Wednesday.

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