The Flight Centre Travel Group Ltd (ASX: FLT) share price has sunk 11% after reporting its FY25 half-year result.
Flight Centre is a global travel agent business that services both corporate and leisure clients.
Flight Centre HY25 result
Here are some of the highlights from the first six months of FY25:
- Total transaction value (TTV) grew by 3.2% to $11.7 billion
- Total revenue increased by 3.2% to $1.33 billion
- Underlying EBITDA rose by 1% to $193 million
- Underlying profit before tax (PBT) rose 7.3% to $117 million
- Net profit after tax (NPAT) fell 31% to $60 million
- Interim dividend per share hiked by 10% to $0.11 per share
While both leisure and corporate grew TTV (by 7% and 1.8% respectively), their underlying EBITDA was virtually flat and underlying PBT only grew by $3 million for the corporate division.
Flight Centre said its corporate TTV of $6 billion was a record and grew in line with the market. A soft result in Asia adversely affected the overall performance.
The company said its leisure division was effective at capturing TTV cost-effectively. Its profit was impacted by “lower super over-rides and front-loaded investments” in the high growth global cruise sector. The Australian segment helped drive growth in international ticket volume.
It was a reduction of the loss of the ‘other’ segment that gave the biggest boost to underlying profit before tax, with decreased head office costs.
Outlook for the Flight Centre share price
The company said its ongoing company-wide focus is to achieve the 2% underlying profit before tax margin.
Flight Centre said that TTV growth is a key driver and it also remains focused on reducing costs. Airfare normalisation, stabilisation of the economy, investment in small business corporate drivers and growth in the second half are “positive indicators” for the second half of FY25 and for FY26.
It’s expecting productivity improvements of between 15% to 20% between FY24 to FY26 to help its margins.
In FY25 it continues to target underlying profit before tax of between $365 million to $405 million, representing growth of between 14% to 26.5% year on year. It’s currently “tracking towards the low-mid section of the range”.
The Flight Centre share price is down 28% since October 2024 and it’s a lot cheaper. It could be a rebound opportunity at this price, but I’m not sure if travel agent businesses can become more profitable in the coming years.
