Flight Centre (ASX:FLT) share price climbs higher on first-half results

The Flight Centre Travel Group Ltd (ASX: FLT) share price is climbing higher following the release of its first-half results. Here’s the highlights.

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The Flight Centre Travel Group Ltd (ASX: FLT) share price is climbing higher following the release of its first-half results for FY20. At the time of writing, the travel agent’s shares are up 7.10% to $17.50.

Let’s see how the company performed for the H1 FY20 period.

What were the financial highlights?

The Flight Centre share price is on the move as investors digest the company’s latest results.

According to its release, Flight Centre advised that it is continuing to weather the difficult trading conditions caused by COVID-19. However, an eventual recovery is on the horizon once the pandemic subsides.

It noted that for the six months ending 31 December 2020, the total transaction value (TTV) stood at $1,533 million. This was a stark but expected fall compared to the $12,399 million recorded in H1 FY20. In essence, the TTV metric represented 12% of the prior corresponding period (pcp).

Total group revenue came to $160 million as opposed to the $1,546 million achieved at the same time last year. Overall revenue margin reduced from 12.5% in H1 FY20, reflected upon heavier domestic and corporate travel weightings. The margin is expected to increase when international air travel resumes.

As a result, Flight Centre recorded an underlying loss of $247 million for the first-half period. Management improved the overall bottom line through cost reductions strategies along with the government’s JobKeeper stimulus program.

Net operating cash flow came at a loss of $30 million primarily attributed to putting the business in hibernation mode.

The company closed the calendar year with a very strong cash balance of $1,670 million. This is almost double of what Flight Centre reported in the H1 FY20 term.

Unsurprisingly, the board again moved against declaring a dividend in light of the current economic situation.

Management commentary

Flight Centre managing director, Graham Turner, touched on the company’s tough operating market. He said:

The conditions we have encountered since March last year have undoubtedly posed the greatest challenge that our industry and many others have faced. Rather than enter a holding pattern ahead of future domestic and international border re-openings, we are taking steps to ensure we are well placed for the eventual recovery.

We have become a leaner and more efficient business with a long liquidity runway, which has been crucial during this challenging and uncertain period.

Outlook for Flight Centre

Looking ahead, Flight Centre stated that recovery is largely dependent on the government’s travel policies and the vaccines’ success. With this uncertain future, the company could not provide guidance for the remaining period of the 2021 financial year.

The company revealed that sales began to drop off last month due to tightened domestic border restrictions along with international still remaining closed. The group is targeting to break-even in both leisure and corporate travel during the 2021 calendar year.

The Flight Centre share price is has fallen heavily in the last 12 months, down 44%.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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