Flight Centre [ASX:FLT] Ups Revenue Three Times to $1 Billion for 2H 2022

Air travel and accommodation booking service Flight Centre Travel Group [ASX:FLT] brandished the travel industry’s recovery with signs of momentum today.

The group said profit for the past six months surpassed expectations, bringing in $1 billion in revenue, tripling the $315 million earned a year before.

$95 million in underlying EBITDA was 19% higher than the first half’s initial target of $70–90 million yet meets latest guidance.

Although FLT was in the mood for celebrating, shareholders were less convinced, downvoting the FLT share price around 2% by noon.

Across a 12-month period, the FLT share price had dropped 6.5%, yet in the first weeks of the new year, the group’s value has managed to rack up 26%:

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Flight Centre curbs its losses as travel momentum returns

The company was buoyant as it dished out its latest financial highlights, covering the period of six months ending 31 December 2022, the second half of fiscal 2022.

FLT reported total revenue tripled, churning the total of $1 billion in comparison with 2021.

Underlying EBITDA had increased 19% on the first half, totalling $95 million, surpassing initial guidance targets but keeping in line the with the latest upgrade.

The group said profits rained across all segments — leisure, corporate, and travel divisions — and geographically, apart from Asia (which made breakeven).

FLT posted a total transaction value (TTV) tracking 80% of record year 1H 2020, moving up 203% on the prior year with $9.9 billion.

The group’s corporate business struck a new record for TTV, soon to top $10 billion for FY23, with corporate outpacing the broader industry’s recovery.

FLT trimmed losses before tax to $18 million (down from $276 million), and underlying 1H cost margins decreased to a record low of 9.9%, while revenue margins increased 40 basis points.

Costs tracked at 70% of pre-COVID levels as FLT balanced the need to maintain tight controls over expenses against longer-term growth objectives.

FLT’s CEO Graham Turner commented:

‘Flight Centre Travel Group has delivered a solid start to FY23 in an improved, but not fully recovered, trading environment.

‘The sales momentum that helped drive our recovery last year continued throughout the 1H, with TTV and revenue both tripling compared to the PCP.

‘Positive margin trends have also emerged, with underlying cost margin dipping below 10% to a record low and revenue margin gradually ticking upwards, in line with our expectations.

‘In both leisure and corporate, we are achieving our strategic objectives and laying foundations for more meaningful profit recovery in the future.’

FLT said margin improvements were assisted partially by cyclical factors such as ‘abnormally high’ airfares and larger numbers of people visiting friends and relatives post-COVID.

Airline capacity is also recovering, cheaper fares soon to compliment higher volumes, and in Australia, FLT expects international capacity to increase to 85% of pre-COVID levels by 30 June.

The group reaffirmed its recent FY23 guidance with no signs of slowdown, targeting $250–280 million underlying FY23 EBITDA (excluding Scott Dunn).

Regards,

Mahlia Stewart

For Money Morning

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