Flight Centre hits new heights
Flight Centre managing director Graham "Skroo" Turner will pocket a dividend for the year of almost $21 million after the travel company he founded delivered another record profit.
Shares in Flight Centre soared almost 9 per cent to an all-time high of $48.41 following a 23 per cent rise in annual net profit to $246 million and the prospect of double-digit earnings growth in the year ahead.
Defying expectations about the threat posed by the internet, Australia's largest travel agency has forecast a rise of 8 to 12 per cent in pre-tax earnings for the new financial year to as much as $385 million.
Flight Centre will pay a final, fully franked dividend of 91¢ on October 18, compared with 71¢ in the same period a year ago. It takes the payout for the full year to $1.37.
Mr Turner, whose private company Gainsdale is the second-largest shareholder, will have pocketed dividend payments of almost $21 million this year. He also received a salary package of $883,304.
The travel company's pre-tax profit of $349 million was better than its forecast at the start of July. Revenue rose almost 9 per cent to $1.985 billion as sales increased in both leisure and corporate travel.
The Australian business was again the main driver of Flight Centre's full-year profit.
Mr Turner said the leisure travel business in Australia performed strongly, helping to more than offset softer corporate travel results. Flight Centre derives nearly 70 per cent of its earnings from Australia.
The company's pre-tax earnings from its British business - its second largest after Australia - have doubled over the past two years to $32 million.
While it had been a solid start in July and August, Mr Turner said it was still difficult to predict the market in the new financial year. Flight Centre has two small acquisition targets on its radar but he emphasised that its main focus would be expanding its existing businesses.
Mr Turner also warned that Flight Centre might have to make goodwill impairments on its businesses in India and the US in 2013-14. The business in India remains the company's problem child, and management warned it did not have any "quick fixes".
"It is a country that's very difficult to do business in, and anyone who goes in there actually needs their head read," Mr Turner quipped. "We certainly won't be putting any more money in there."
Mr Turner also reiterated that the company does not expect large shifts in the value of the dollar to radically change travel habits.
"We don't think this dramatically affects us. It just means people going to the States might have to trim their budget back a little bit - maybe stay in four-star [hotels] rather than five-star," he said.
Qantas-backed Jetset Travelworld on Tuesday posted an 8 per cent rise in pre-tax earnings to $55 million for the year. But it warned that the cost of introducing its Helloworld brand will crimp pre-tax earnings in the new fiscal year.