Flight Centre Travel Group Ltd shares get cheaper as profit soars

Flight Centre Travel Group Ltd (ASX:FLT) reported a strong set of half-year profit numbers.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of Flight Centre Travel Group Ltd (ASX: FLT) fell 1.5% today despite the company announcing a robust half-year report.

For the six-month period ended 31 December 2015, Flight Centre announced revenue growth of 15.1% to $1.27 billion and a profit of $116.7 million, up 16.3% on the prior corresponding period.

For the 19th time in 20 years, Flight Centre increased transaction volumes despite challenging trading conditions.

“Overall, we have started the year reasonably, given the conditions and the investments we have made,” Flight Centre’s managing director, Graham Turner, said.

Every one of Flight Centre’s key reporting lines, from Australia to the United States and UK, experienced revenue growth. Total store numbers across the global network rose from 2,759 to 2,943.

Pleasingly, an interim dividend of 60 cents per share was declared, up 9.1% from the prior corresponding period. The fully franked dividend is payable on April 14, 2016.

“Our financial results, particularly the $1billion first half TTV increase, have been encouraging and we have made significant enhancements at an operational level,” Mr Turner added. “Importantly, we have maintained an exceptionally strong balance sheet, while acquiring businesses to fast-track our growth in key sectors, and made significant strategic progress.”

Debt fell from $32.8 million to $21.2 million, while Flight Centre’s cash balance stood at $429.8 million – leaving the company in a strong net cash position. That’s despite the company making a number of acquisitions during the half.

Looking ahead, the company remains focused on travel retailing, experiences, corporate, and youth sectors. It says it will expand its network of non-travel businesses and is considering a longer-term plan to develop “travel incubation hubs”.

Outlook

For its 2016 financial year, the company reaffirmed profit before tax guidance between $380 million and $395 million, excluding the ACCC refund, potential intangible impairments in the US and India, and any unforeseen items.

“If we achieve our target, we will top last year’s result by 4-8% and the record $376.5 million underlying PBT we achieved in superior conditions two years ago,” Mr Turner said. “While we will be disappointed if we do not achieve our goal, establishing a new profit milestone will not be a formality given our size, the strategic investments we are making and the volatile conditions in some geographies heading into our peak booking months.”

Foolish takeaway

Despite the falling share price, today’s results are strong in my opinion. I think the company is wise to focus on the longer-term growth in both the digital and youth travel space and it has a flexible balance sheet to support these initiatives.

With Flight Centre shares trading at less than $40, I think it’s worthy of a spot on watchlists.

Motley Fool Contributor Owen Raszkiewicz has a financial interest in Flight Centre. Owen welcomes -- and encourages -- your feedback on Google+, LinkedIn or you can follow him on Twitter @ASXinvest. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »