The Flight Centre Travel Group Ltd (ASX: FLT) share price is under the spotlight today after the ASX travel share announced its FY23 result.
Flight Centre Travel share price
FY23 result
Here are some of the highlights from the 12 months to June 2023:
- Total transaction value (TTV) grew by 112% to $21.9 billion
- Operating revenue increased 127% to $2.28 billion
- EBITDA (EBITDA explained) went up 233% to $266 million
- Profit before tax (PBT) rose 119% to $70 million
- Underlying earnings per share (EPS) went up 127% to $0.37
- Statutory EPS increased 116% to $0.29
- Final dividend per share of $0.18
Flight Centre said that its key global strategies have been successfully executed.
It has been keeping a tight lid on costs – Flight Centre said that it achieved 92% of the FY19 TTV while only having 75% of the FY19 cost base. Productivity has also improved, with a 52% rise in TTV per full time employee compared to FY19.
The business also said that it’s doing very well with its corporate travel segment, delivering record TTV which is “well ahead” of the industry’s recovery timeframe. The leisure business is also recovering rapidly.
It managed to achieve a record low underlying cost margin of 9.6%, compared to 11% in FY19 and 13.6% in FY22. The revenue margin is reportedly improving, with a year on year rise of 70 basis points (0.70%) compared to FY22.
Flight Centre has a goal of a 2% underlying profit before tax margin for FY25, and the business has made “early progress” towards this.
Flight Centre dividend policy
The ASX travel share’s dividend represents 52% of underlying NPAT for FY23.
Fight Centre’s board has decided on a new dividend policy thanks to “solid” cashflows and cash generation. It’s going to return 50% to 60% of net profit to shareholders in the form of dividends and share buybacks.
Outlook for the Flight Centre share price
Things are looking positive for the company in the shorter-term.
The ASX travel share is expecting good travel dynamics for travellers with competition on international routes increasing and airfare prices decreasing.
Flight Centre is expecting further leisure and corporate TTV growth within the business.
It’s also expecting the revenue margin to gradually increase and the cost margin to gradually decrease.
The company is looking to work with airlines to increase its total available margin (TAM) paid to its group of businesses through new distribution capability deals and content arrangements, net fares and mutually beneficial partnerships.
Flight Centre is expecting more leisure travel as airfares reduce and households prioritise travel over other discretionary categories. Low unemployment rates globally is helping the leisure sector.
In the corporate segment, it’s expecting new client wins will drive TTV above the record FY23 result.
Flight Centre said that profit guidance will be given at its annual general meeting (AGM) on 15 November 2023.
I think it’s done well at capturing the travel recovery, but the market is now well aware of what’s going on, so I don’t think there’s a hidden opportunity here. I’d rather look at some ASX growth shares.
