Flight Centre sees positive signs about the current financial year after posting a 72% drop in earnings for the year to June.
The company told the market yesterday it earned a net profit of $38.164 million for the 2008-09 year, down from $134.78 million in the previous financial year.
The bottom line result was affected by $59.4 million in one-off asset impairment and write-downs, plus $38 million in US trading-related losses and expenses.
"Sales results were affected by a slowdown in global demand during the second and third quarters and lower than normal yields late in the year, reflecting unprecedented airline and land operator price discounting," it said yesterday.
“While FLT has not yet seen conclusive evidence of a full recovery, the company has started the year with some positive momentum from the fourth quarter, particularly in the US, and has achieved encouraging trading results in July and August.
“Cheap airfares and holiday deals have started to stimulate demand, which has led to improving sales volumes, albeit at lower than normal yields.
“While there are certain to be some challenges, FLT is in a very solid position.”
The company’s pre-tax profit was $40.4 million for 2008/09, down from $201 million a year earlier, which was in line with previous guidance of between $36 million and $40 million.
"As announced previously, FLT will not declare a final dividend for 2008/09 and will preserve cash in the short-term. FLT’s Board expects to restore its policy of returning 50-60% of net profit after tax to shareholders as soon as it is reasonable to do so.
"The company will also continue to reduce capital expenditure and expects to spend less than $60million during 2009/10, as project and building-related spending reduces and new shop growth is more modest, CEO, Graham Turner told the market in the statement.
"Flight Centre starts 2009/10 with some positive momentum from the fourth quarter of 2008/09 and early results for the new year are encouraging," the company said yesterday.
The company said it would initially target a pre-tax profit between $125 million and $135 million in an improving but still uncertain trading climate during 2009-10.
Flight Centre said it improved its net debt position during 2008/09, with debt at $128 million, down from $161 million one year ago.
Flight Centre shares lost 2 cents to $13.25.
Shares in Sydney-based building services and refrigeration company Hastie Group rose nearly 5% yesterday after the company produced a solid performance from its Australian operations which helped push its full year profit up 53%.
The shares ended up 7.6%, or 14 cents, at $1.965, to continue the solid recovery in the price since late July.
That was despite a cut in the final dividend to 5 cents a share, from 9 cents in 2008.
Hastie said net profit rose to $58.34 million for the year to June, compared with the $37.96 million earned in the previous year.
Revenue jumped 40% to $1.8 billion, despite the slowdown in the building and associated sectors here and in many parts of the world.
The company said it is well positioned to take advantage in a recovery in global markets.
"We have a solid pipeline of active prospects for 2009/10 and 2010/11 in our three geographic regions, a strong balance sheet and a secure debt position," the company’s CEO, David Harris said in yesterday’s statement.
"Our four Australasian divisions, which together contribute more than 70 per cent of group revenue and over 75 per cent of EBIT (earnings before interest and tax), all performed exceptionally well."
Hastie said it continues to monitor its markets closely and is targeting 2009-10 revenue in line with 2008-09. The company says it has 90% of 2010 revenue already "in hand".
"But results will ultimately depend on the timing of the recovery in our markets," it added.
It said increased government expenditure on government-backed projects would help its bottom line.
The company said revenue was up 40% to $1.781 billion and EBIT rose 34% to $90.1 million.
"The result demonstrates the robust nature of the group’s decentralised business model and strategy," said company chief David Harris.
After a $77 million capital raising net debt as of June 30 was $171 million, down from $192 million at the end of 2008.
"With strong market positions, a solid order book and prospect pipeline, and a robust balance sheet, the group is well placed to benefit from increasing government and private sector investment," the company said.
But the cut in final dividend to five cents, from nine cents last year, takes the total for the year to 12 cents a share, down 25% from the 16 cents paid last year.
As remarked on before, that’s always a sign of the real feelings in management and the board about the outlook.
Despite the confidence about 2010, the company feels that in the present conditions here and around the world, cash in hand is better than cash paid out, even if debt has been lowered.
And the company does have a problem: one division, which accounts for a fifth of turnover, is not running well.
‘‘Rotary’s performance, although below expectations, was creditable in very difficul
