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The Flight Centre Travel Group Ltd (ASX: FLT) commenced its fiscal year 2024 with promising results, but recent developments at its annual general meeting (AGM) have stirred a downturn in its share price.
As of the latest update, the travel agency's stocks have dropped by 3.44% to AU$18.78. Conversely, the S&P/ASX 200 Index (ASX:XJO) has surged by 1.42% to close at 7,105.90 points, buoyed by investors' reactions to a modest 3.2% inflation figure in the United States overnight.
Despite the widespread buying spree across the Australian market, Flight Centre shares have faced a decline, contrasting with the company's relatively positive first-quarter figures disclosed during the AGM.
Performance Overview in FY24:
In today's AGM, Flight Centre's management provided insights into the company's performance in the first quarter of FY24.
The total transaction volume (TTV) achieved in Q1 marked the second-best start to a year in the company's history, reaching AU$6 billion—a 20% increase compared to the previous year. Notably, this TTV is just shy of the AU$6.2 billion recorded before the pandemic.
The company also highlighted that its corporate total transaction volume maintained 'record levels', surpassing the broader industry's recovery pace.
Post-pandemic Challenges and Future Outlook:
While acknowledging the ongoing recovery challenges within the travel sector post-pandemic, Flight Centre's managing director referred to data from the International Air Transport Association (IATA) to shed light on the industry's outlook.
The managing director expressed optimism, quoting IATA projections of a 3.4% compound annual passenger growth globally through to 2040, with most markets anticipated to recover next year.
Financial Performance and Projections:
Flight Centre's financials for Q1 FY24 showcased a substantial boost in underlying profits before tax, surging by 500% to AU$54 million, albeit at a margin of under 1%. Meanwhile, earnings before interest, taxes, depreciation, and amortisation (EBITDA) tripled to AU$102.3 million.
Looking ahead, the company expects an underlying profit before tax between AU$270 million and AU$310 million for FY24, representing a potential ~175% increase from the prior year. Similarly, the projected underlying EBITDA ranges between AU$460 million and AU$500 million, signaling a 60% growth at the midpoint.
Flight Centre's Share Price Trend in 2023:
Amidst rising rates and global uncertainties, the Australian share market witnessed fluctuations throughout 2023. However, Flight Centre's shares defied this trend.
While initially moving in tandem with the broader index, Flight Centre shares diverged, registering consistent upward momentum. Despite peaking at AU$23.37 on July 31, the share price has since retraced to AU$18.78.
