Flight Centre levels out as high dollar boosts overseas trips
FLIGHT CENTRE is forecasting another year of double-digit growth in pre-tax profits as cheap fares and a strong dollar continue to encourage Australians to travel abroad.
FLIGHT CENTRE is forecasting another year of double-digit growth in pre-tax profits as cheap fares and a strong dollar continue to encourage Australians to travel abroad.Australia's biggest travel agency yesterday unveiled an annual net profit of $139.8 million for the year to June, almost unchanged on the previous year. However, underlying pre-tax profits rose almost 20 per cent to $245 million, due largely to the performance of its core Australian business.The managing director, Graham Turner, said healthy demand for international travel had helped offset weakness in domestic tourism. International fares had increased only modestly since the global financial crisis in late 2008.The corporate travel market in Australia remained strong but Mr Turner warned that "we are just finding trouble getting growth in domestic leisure".Flight Centre's income margins were squeezed slightly because of strong competition in the retail segment and its increasing exposure to corporate travel. The latter generates lower income margins.The company has forecast a pre-tax profit of $265 million to $275 million for this financial year. It is expecting growth of 10 per cent in all of its markets except the US."We are confident we can build on the profit this year, barring any major misfortunes. The year hasn't started off too badly and we have our fingers crossed and a couple of toes as well," Mr Turner said."We will be reasonably happy if we can maintain both 10 per cent [growth] in [total transaction value] and the bottom line. Australia is our profit powerhouse at this stage but the other countries are becoming more important and having them in a [pre-tax profit] position is particularly important for our future."Shares in Flight Centre rose almost 4 per cent to $18.66 yesterday.While adopting a bullish outlook compared with many retail-exposed sectors, Flight Centre cautioned that economic conditions remained volatile, particularly in Britain and the US.The company said the performance of the British operations over the last financial year was disappointing.It had witnessed a softening in demand since the British government's austerity measures.In the US, profits from corporate travel helped overcome small losses in its leisure and wholesale operations. Flight Centre has stripped out $30 million in annual costs from the US business.The company will pay a final dividend of 48? a share on October 7, taking the payout for the year to 84?.AT A GLANCE2011 2010Revenue $1.86b $1.8bProfit $139.8m $139.9mDividend 84? 70?EPS 140? 140.3?