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Highlights:
- Flight Centre Travel Group Limited (ASX:FLT) released its 1HFY23 results on 22 February 2023.
- In 1HFY23, FLT’s total transaction value was AU$9.9 billion, rising 203% from pcp.
- For the full FY2023, the company aims to achieve an underlying EBITDA between AU$250 million and AU$280 million.
Flight Centre Travel Group Limited (ASX:FLT) shares opened higher on Thursday, 23 February 2023. However, opening gains in the shares of the travel management company could not sustain and FLT stock was trading 0.18% lower at AU$18.48. Today’s loss comes on top of yesterday’s loss of 0.65% following the release of its 1HFY23 ended 31 December 2022 earnings.
| Company Name | Market Price (AU$) |
Market Cap (AU$) |
Yearly Return (%) |
Dividend Yield (%) |
PE Ratio (x) |
YTD (%) |
52W High (%) |
52W Low (%) |
|
|---|---|---|---|---|---|---|---|---|---|
| FLIGHT CTR FPO [FLT] | 18.48 | 3.928B | -5.23 | NA | 7.07 | 27.54 | 23.38 | 13.86 | |
*Data powered by Morningstar®. Data delayed 20 minutes unless otherwise indicated. Read More
as of 23/02/2023, 12:16:33 PM AEDT
In the first half of the current fiscal, Flight Centre reported a net loss at the bottom-line level despite reporting an over 200% jump in revenue. Let’s flick through the company’s earnings in detail.
During 1HFY23, FLT’s total transaction value was AU$9.9 billion, a 203% jump versus AU$3.26 billion in pcp. Revenue stood at AU$1 billion, increasing 217.3% from AU$0.315 billion in 1HFY22. Underlying EBITDA improved by AU$279.18 million to AU$95 million versus a loss of AU$184 million in pcp. On the bottom line front, the company reported a loss of AU$2.45 million, which marks an improvement of 98.7% over the loss of AU$188 million in pcp.
As projected in January’s trading update, FLT delivered more than initially anticipated underlying earnings before interest, tax, depreciation and amortisation of AU$95 million in 1HFY23. It was 19% above the mid-point in the company’s initial guidance range for the period (AU$70 million-AU$90 million underlying EBITDA) and nearly AU$280million turnaround versus AU$184 million underlying EBITDA loss noted in 1HFY22.
FLT’s segment performances
The company’s Corporate Travel business continued its strong recovery, delivering record first-half TTV of AU$5billion, nearly 150% growth on 1HFY22 and AU$80million in underlying EBITDA, in comparison to an underlying AU$31million loss in 1HFY22.
Further, FLT’s international Leisure Travel business recuperation obtained momentum with TTV rebounding rapidly since the AU$4.4billion TTV in the first half result was more than five times the previous year’s half-year TTV and 44% of group TTV (increasing from 25% in 1HFY22). Profit also improved, and the underlying EBITDA improved from an AU$140 million EBITDA loss in 1HFY22 to AU$43 million positive EBITDA in 1HFY23.
FLT’s dividend policy
Since Flight Centre is still recuperating from the pandemic, the company’s management decided it was not wise to announce an interim dividend for 1HFY23. Also, during FY2022 ended 30 June, no final dividend was announced.
Further, Flight Centre has commenced a review of its capital structures in advance of an expected uplift in earnings and cash generation. This review will take into account the business’s cash needs to finance development, and debt structures, comprising of Flight Centres convertible notes.
FLT’s FY2023 Outlook
For the full FY2023, the company aims to achieve underlying EBITDA between AU$250million and AU$280 million, exclusive of Scott Dunn’s contribution (circa AU$6-AU$8 million EBITDA anticipated after the conclusion of acquisition by the year’s close).
The company's Scott Dunn acquisition was formally completed on 7 February. It has boosted FLT’s presence in the luxury travel sector internationally.
The middle point in this target range entails a 35%-65% earnings split between the first half and second half (in accordance with normal seasonality).
In the second half of FY2023, profit uplift is anticipated to be propelled by seasonality, additional increase in top-line, stable supply chain, and operational enhancements that are likely to enhance margins. The corporate business is set to gain from new accounts won, onboarded and serviced more effectively.
The company is laying emphasis primarily on organic growth but will contemplate additional strategic M&A prospects. In the second half, FLT is anticipating a gradual recovery towards longer-term 2% underlying PBT margin objective (by the close of FY25).
