Contrasting results yesterday from the world of bricks and mortar and online travel.
It’s a business battle that sums up much of what is going on in the economy at the moment – established companies in sectors under attack from younger online operators with lower costs.
But that’s not how it’s panning out in the travel business in this country where clicks and mortar (Flight Centre) is definitely doing better than the pure online companies (Wotif).
Investors gave yesterday’s Flight Centre (FLT) interim result a mixed reception to start with, but the company’s record profit and higher dividend eventually convinced the market.
The shares fell, then rose, eased and then rose again, finishing up 3.2% at $51.39.
That’s despite Flight Centre revealing a 22% rise in first-half net profit to $111 million as the slide in the value of the dollar failed to put a dent in Australians love affair with overseas travel.
Interim dividend was boosted more than 19% to 55c a share dividend, payable on April 17, up from 46c in the December 2012 half year.
Flight Centre reported a 20% rise in profit before tax to $155 million for the six months to December, which included a $9 million on-off gain from its wholesale business.
FLT vs WTF 2Y – Flight Centre reveals another record, lifts payout
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Flight Centre CEO Graham Turner said in yesterday’s statement that its Australia business had been its key contributor to overall earnings, although it had experienced growth in its overseas earnings.
Flight Centre said its three largest businesses in Australia, the UK and the US generated almost 80% of its total transaction value (the price at which goods and services are sold) in the first half. (That’s not its revenue – that totalled $1.1 billion, up 15.1%.)
One trouble spot was the company’s operations in the US, which posted a loss, and Canada where results fell short of expectations.
Looking to the rest of 2013-14, company said it continued to target a profit before tax for the year of between $370 million and $385 million, which assumed stable conditions.
‘The company sees growth opportunities in all markets,’ Mr Turner said.
‘While we are making sound progress and first-half trading results are promising, it is too early to amend full year guidance," the company said yesterday.
The second-half is historically Flight Centre’s busiest period, so perhaps investors should watch for another upgrade in coming months. If there’s no upgrade, then the company’s guidance probably won’t change.
