Flight Centre founder Graham Turner must be kicking himself.
Ever since he was rebuffed in his bid to take the company private back in 2007, the travel group has delivered an almost never ending series of profit upgrades and spectacular earnings lifts (see Roger Montgomery's Flight Centre's high-flying journey).
Back then, the internet was threatening to kill the business. It didn’t. The worst financial crisis in history barely interrupted proceedings.
And now the threat of a deflating Australian dollar appears to be having little effect on the company’s earnings and share price. In fact, it is likely to be a boon to a group now earning a significant chunk of its earnings offshore.
Shareholders who rejected that $17.20 offer, even as the stock market boom was approaching its zenith, have been richly rewarded.
The share price hit $39.63 this morning shortly after Turner yet again announced that guidance on this year’s earnings was a little undercooked, but was well north of $40 in May. It has barely dropped during the recent correction that has swept the domestic market.
Full-year underlying earnings in the order of $340 million were anticipated, around 17% up on last year as foreign earnings from a recovery in US and American corporate travel begin to flow through to the bottom line.
Corporate travel in the UK and America accounts for around 10% of the company’s transaction values and slightly more in terms of earnings.
Turner this morning pointed to China and Singapore as major growth centres for Flight Centre in what is now a rapidly expanding global operation.
The company’s bread and butter is its Australian operations. Despite concerns about a weaker currency dampening demand for international leisure travel, most of its traffic is directed towards Indonesia, Fiji, New Zealand and Thailand – destinations that are relatively immune to currency shifts.
Almost every major broking house lists the company as a buy right now.