The one point to be made immediately about Flight Centre (FLT) is it has been a most consistent outperformer on the ASX in the past year to 18 months. It has done that in a positive fashion by riding the surge in offshore travel by Australians seeking to take advantage of the higher dollar in the past couple of years. And 2012-13 is going to be no different.
Yesterday it issued what was either its 4th or 5th upgrade in the past couple of years – this time it was for the second time in two months, putting the country’s largest travel agency on track to post another record profit.
Flight Centre shares rose nicely in yesterday’s sell-off, finishing 41c or 1% higher at $39.71 after it told the market that a strong end to 2012-13 meant pre-tax profits were likely to be at the top end or slightly above previous guidance.
FLT 1Y – Yet another upgrade from Flight Centre
The company said in its update that unaudited figures indicated that the company would post an underlying pre-tax profit of between $338 million and $342 million for the year to June. (The figure excludes non-cash items, such as impairment of assets.)
Flight Centre said actual pre-tax profits were expected to exceed the underlying pre-tax earnings because it was likely to book an extra $6 million profit from a property portfolio transaction.
The company initially targeted underlying annual pre-tax profits of $305 million to $315 million for 2012-13, but raised its guidance in May to between $325 million and $340 million.
Seeing Flight Centre earned just over $290 million (pre tax) in 2011-2, a result at the top of current guidance could be an increase of around 15% or more.
Flight Centre managing director Graham Turner said in the update that the ‘‘positive momentum’’ had continued in the last two months of the financial year, which would result in all of its businesses across 10 countries recording pre-tax profits for the third year in a row.
‘‘Australia and the UK, Flight Centre’s major profit drivers, easily surpassed their previous profit records, along with the emerging greater China and Singapore businesses,’’ he said. Australia, the UK and the US generated about 80% of Flight Centre’s sales.
Mr Turner said a strong performance by its leisure-travel business in the second half more than offset a ‘‘slightly softer’’ domestic corporate travel market and strong leisure travel also underpinned Flight Centre’s performance in the UK.
FLT said that the better operational performance was producing more cash which the company was saving, while keeping debt levels low.
"At June 30 2013, the company expects to have more than $400 million in general funds (excluding client cash), in line with its cash accumulation goal, and a positive net debt position in excess of $300 million.
"General funds will, however, decrease early in 2013/14 when the company makes its normal tax and dividend payments.
"As indicated previously, FLT will also consider retiring about $30million in overdrafts and loans (related to the Asia-Middle East businesses) to lower overall interest expense," the company said yesterday.
The company will release audited full year accounts on August 27.
