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Flight Centre is now boarding for take-off

Taking off in business and in share price, Flight Centre (ASX: FLT) has again reported a strong full-year result with revenue up 9% from $1.82 billion to $1.96 billion. Net profit boomed even more from $200 million to $246 billion — up 23%.

The 10 countries it operates in all delivered profits, with record earnings in its three largest businesses — Australia, the US and UK. These three make up about 82% of total sales. Two countries that did have not as strong increases were Canada and Dubai.

The strong performance of the leisure travel business in Australia more than offset the weaker corporate travel results, particularly in the second half. Coupled with this, rent costs rose less than shop and business growth. Marketing and sales costs were also down year-on-year, further widening overall profit upwards.

Turnover of its corporate travel businesses was over $2 billion, further establishing its position as the largest corporate travel service provider in Australia. Its FCm Travel Solutions was awarded the title of the world’s Best Travel Management Company for the second time at the World Travel Awards in as many years.

According to IBISWorld,  Flight Centre controls about 40% of the Australian travel agency and tour arrangement services industry, ahead of Jetset Travelworld (ASX: JET), Wotif.com (ASX: WTF) and Webjet (ASX: WEB).

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Physical shop numbers now stand at 2,481 — up 5% — and staff have increased similarly to 12,701 in total. Moving forward, UK shop and business numbers are expected to increase 11% during 2013/14. In the US, the company is expanding its corporate flight business into Minneapolis and Atlanta, two big air travel hubs, giving it a 17-city presence. Just within this past year, four cities were added to its US city list.

On the financials side, its strong earnings enabled debt reduction down to $46.2 million from $107.2 million, resulting in a gross gearing of only 4.5%. Taking cash into account, the net debt position is a positive $387.6 million.

Return on equity is 23.39% and net profit margins stand at 12.34%, the strongest level in the past 10 years.

Foolish takeaway

The company’s share price since July 2012 has risen approximately 140% from $20.00 to about $48. In March 2009 in the deepest part of the GFC, the share price fell to $4.00, so it has risen 12 times in about four years. The age-old investing saying of “Don’t buy until there is blood in the streets” once again plays out with sage-like wisdom. An investor only needs one or two of these earners in their portfolio to realise great gains overall.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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