For such a strong (but well-guided) annual result, the 2.9% rise for Flight Centre Group (ASX:FLT) shares on Wednesday seemed appropriate.
The travel giant easily met consensus forecasts and rewarded shareholders with a more than doubling of dividends to 40 cents per share.
This followed a tripling of the company’s reported profit before tax (PBT) to $320.4 million, slightly exceeding the market’s expectations and the midpoint of the reduced guidance range (from a couple of months ago) of $316 to $324 million.
The 40 cents per share dividend was more than double the 18 cents per share from the previous year.
Perhaps the muted reception was due to the travel boom by Australians in the wake of the pandemic becoming a well-known story. Webjet, the online rival, has performed so well that it plans to split itself into two companies, undoing the pre-pandemic rationale of combining travel and accommodation.
Flight Centre reported a total transaction volume (TTV) growth of 8.2% year-on-year to $23.7 billion, finally surpassing its FY19 peak. Total revenue increased by 20.9% to $2.8 billion, while underlying EBITDA jumped 58.6% to $478.5 million.
The company expects capital expenditure to reach $100 million in FY25, with around 75% invested in technology and systems. It also plans to open approximately 35 new leisure travel shops globally, including 18 Travel Money outlets.
The group anticipates the travel industry to return to normal growth levels of 4% to 5% in the upcoming year, reaffirming its 2% PBT margin target.
Flight Centre noted that despite TTV reaching a record level, the growth rate was negatively impacted by significant airfare deflation (which should benefit its customers), business closures, and a flat trading environment in the global corporate sector towards the end of the year.
The company observed that cost-of-living pressures have curbed discretionary spending, but travel has generally outperformed other sectors.
CEO Graham Turner stated in the press release, “In an uncertain macroeconomic and geopolitical climate, our business and the industry in general continued to grow—once again highlighting the sector’s resilience and our strength as a diversified global travel company.”