Like Woolworths, travel agent and operator, Flight Centre is looking for a slower and lower 2009 after a hectic 2008.
And like Woolies, the market didn’t take kindly to the news and sold off the shares, which ended down 49 cents at $18.40 after trading through a big spread from $18.43 to $17.80.
Pre-tax profit grew 40.4% to $212.9 million in the June 30 year, – after excluding a one-off $22.4 million gain in 2006/07 – and was in line with its guidance for a result around $212 million. (The company had seven or eight upgrades during the year).
The main driver for the company was the 7%-8% surge in the number of Australians who travelled offshore in the year as they took advantage of a rising Aussie dollar, which cut the costs of travel, especially against the US.
"Flight Centre starts the new financial year with significant momentum from 2007-08, a strong balance sheet and with foundations in place for further growth," acting chief executive Shannon O’Brien said in a statement to the ASX.
"While we do not expect to replicate the 30 per cent to 40 per cent increases we have achieved in each of the past two years, we will be disappointed if we do not increase pre-tax profit by 10 to 15 per cent," he said.
"Shop and business growth during 2008/09 will predominantly come from organic expansion of FLT’s existing travel brands.
"The company will continue to pursue strategic acquisitions and joint ventures if opportunities arise. FLT currently holds 50% interests in two joint ventures, a recruitment venture with Employment Office Australia and an adventure travel operation with wholesale specialist Intrepid.
"In May 2008, the company also announced preliminary plans to form a joint venture with bicycle retailer 99 Bikes, which is partly owned by Graham Turner’s family company.
"FLT is on track to implement a new corporate structure during the first half of 2008/09.
"As disclosed previously, the new structure will provide the company with the flexibility to introduce a moderate level of debt into its business if it chooses to do so at an opportune time in the future, while continuing to comply with complex regulatory requirements relating to travel agencies in Australia and other jurisdictions."
Net profit rose 18% to $143.15 million, up from $120.82 million in the 2007 year when the company’s shareholders and or directors said ‘no’ to two private equity buyout proposals.
Mr O’Brien said the company’s established markets in the UK, South Africa, Canada and Australia continued to perform well and were expected to drive profit growth.
He said the company had also identified further growth opportunities within wholesale and corporate travel globally.
Flight Centre said total transaction value (TTV) rose 13.2 per cent to $10 billion in 2007/08, while revenue grew 18.4% to $1.4 billion.
Its income margin, expressed as revenue as a percentage of TTV, increased to 13.36% at the end of the year, from 12.98% the end of 2006/07.
"Flight Centre continues to increase its scale in all countries, while also developing a broader foundation," Mr O’Brien said.
"In addition to being one of the world’s leading leisure travel providers, the company is now a significant and emerging presence in global corporate and wholesale travel.
"We see our diversity – of both brands and geography – as a platform for the future and a real strength."
Flight Centre declared a final dividend of 48.5 cents per share, up from 46 cents in the previous corresponding period. That took the total for the year to 86 cents a share from 66 cents. The interim was boosted to 37.5 cents from 20 cents in 2007.
