FLIGHT CENTRE RESULTS DEFY ONLINE COMPETITION

Written on the 22 February 2012

FLIGHT CENTRE RESULTS DEFY ONLINE COMPETITION

A CBD travel agency group has resisted rising online competition and the pinch of a high Australian dollar to report healthy returns for the first half of fiscal 2012.

Flight Centre (ASX:FLT) has reported a first-half net profit after tax (NPAT) of $81.6 million, representing a 16 per cent increase on the previous corresponding period.

The result came after it carried out an aggressive strategy to enhance hotel and cruise booking engines, sell more international airfares on flightcentre.com.au and offer more international flight and hotel products on travelthere.com.

Managing director Graham Turner (pictured) responded to the growth by increasing the group’s original full-year profit target of $265-275 million.

“We will now target a profit before tax (PBT) of $270-290 million, excluding any major abnormal items that may arise and assuming stable trading conditions,” he says in a statement to the ASX.

“If achieved, a profit within this range will represent 10-18 per cent growth on the underlying $245 million PBT achieved last year.”

However, Air Australia’s voluntary administration is predicted to cost the group as much as $1 million but Turner makes no apology for the group’s costly moral stance.

“The company took steps to protect its customers and shareholders after travel insurance providers removed insolvency coverage for the airline in December,” says Turner.

“Had FLT not taken action to minimise company and customer risk, losses would have been greater.”

Turner cites strong sales growth from the group’s US corporate travel business and emerging Dubai and Singapore counterparts. Retail travel businesses in China and Hong Kong also recorded positive growth.

FLT’s global cash and investment portfolio totalled $800 million on December 31, 2011 compared to $731 million one year earlier. Total debt stands at $170 million.

Turner expects a major influx of capital during the six months to June 30 as a result of peak second-half bookings for payments to suppliers.

The Board of directors today declared a fully franked $0.41 per share interim dividend would be paid on April 13. It represents a 14 per cent improvement on last year’s corresponding interim dividend.

FLT shares remained flat today at $21.47 per unit.


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