Today is a big day for Flight Centre Travel Group Ltd (ASX: FLT) shares.
Not because of any outsized share price moves, though investors are bidding the stock up. In early morning trade, shares in the S&P/ASX 200 Index (ASX: XJO) travel stock are changing hands for $16.82 apiece, up 1.1%.
Rather the big news for Flight Centre shares today is that the company is hosting its annual general meeting (AGM). Flight Centre also released a trading update with profit guidance.
Here's what the company's top brass had to say.
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Flight Centre shares in the spotlight amid AGM
Flight Centre chairman Gary Smith opened the meeting by reviewing some key achievements of the 2024 fiscal year (FY 2024).
Among those achievements, Smith said:
We delivered record total transaction value (TTV) of $23.74billion. This was just above FY19 and a circa $1.8billion (or 8%) year-on-year improvement.
This new TTV milestone was achieved with a lower number of staff compared to FY19 and a lower cost base.
Smith also noted that Flight Centre shares benefited from "a material profit recovery" in FY 2024. The company reported a 131% underlying profit before tax (PBT) increase to $320 million and a 212% statutory PBT increase to $220 million.
And he highlighted the 0.72% increase in the company's underlying profit margin to 1.35%.
"We also finished the year with a very strong balance sheet with more than $1.1billion in cash and investments and materially lower debt levels," Smith added.
On the technology front, Smith said, "We are investing in a host of new technologies, enhancing our customer facing platforms and investing in our data analytics capabilities."
As for the potential of AI to boost Flight Centre shares, he added:
We are also leveraging machine learning, AI and natural language processing to enhance our consultants' effectiveness in highlighting options for customers and to improve conversion.
In relation to AI, a number of programs are in place within our corporate and leisure businesses aiming to improve our efficiency and to augment the services that we provide.
A word from the CEO
CEO Graham Turner then took to the podium to shed some insight into what investors can expect from Flight Centre shares.
Commenting on recent trading in Q2, Turner said he was "heartened by a marked recovery in October across our key metrics of TTV, profit and profit margin". This follows what he described as a "patchy first quarter".
Noting significant changes in the company's operations since 2019, he said, "Our luxury, specialist and independent businesses now capture almost half of our leisure TTV, compared to about one third five years ago. We also capture 15-20% of our leisure TTV online."
And with the pandemic impact fading in the background, the cruise business is rebounding.
"Our cruise sales in particular are growing strongly – up 31% in Australia last year – and we're now looking to fast-track our growth globally," Turner said.
Looking at what could boost Flight Centre shares over the full FY 2025 year, the company is aiming for an underlying PBT between $365 million and $405 million.
"The mid-point of $385 million represents 20% growth on FY24," Turned noted.
He said the company's earnings are expected to be "very heavily" weighted to the second half of the year because of its leisure and corporate sector booking seasonality.
Turning to the company's goal of underlying profit margin improvement, Turner said:
While we acknowledge we are now unlikely to achieve a 2% underlying PBT margin this year, our initial stretch timeframe, it remains a priority and a relevant medium-term objective.
Our primary short-term focus is on profit growth, while increasing TTV, which means we will not slow growth in profitable but lower margin businesses that continue to perform strongly in order to artificially achieve the 2% target.
Flight Centre shares are down 14% over 12 months.
