What: Travel agency and holiday reservation company Flight Centre Travel Group Ltd (ASX: FLT) today reported a full year underlying net profit increase of 9.8% in what was a solid year of growth both in Australia and its overseas operations. However, the stock has been knocked down as much as 3% in morning trade.
So What: After $52.7 million was booked in non-recurring items, statutory net profit was down 15.9% from $246.1 million to $206.9 million, which is what the market didn't want to see. The franchise network is being revamped and expanded and is now over 2,500 stores. Its international business has added greatly to the bottom line, with overseas EBIT almost tripling in the past four years. Its UK market is the second biggest earnings contributor after Australia, yet the U.S. business is second in total sales.
Its new Hyperstore format is being rolled out on the back of the success seen in its flagship Brisbane store. Boston has a new one and more are planned in Darwin and possibly in LA and Philadelphia.
With the weaker domestic economy, Australian leisure has been volatile according to the company. It is trying to drive demand with cheaper airfares to Asia and Europe. All of the 10 countries it serves were profitable, with its two biggest international markets, the U.S. and the UK, up 16% and 24% in EBIT, respectively.
Below are some of the other highlights from the report.
> Earnings before interest, tax, depreciation and amortisation (EBITDA) at $378.4 million
> Revenue was up 13% to $2.2 billion
> Basic earnings per share (EPS) were $2.05
> Final dividend was raised to 97 cents per share fully franked, increasing the total dividend 11% to a record $1.52 cps.
Now What: There are some headwinds for the domestic market, yet the growth seen internationally means Flight Centre is on the right track for future earnings increases. Its Asian market where it has started new ventures in Singapore and China has good promise as well. Foolish investors should look past the knee-jerk share price drop. The basic growth story is still there, so you can stay relatively bullish on Flight Centre.
