Flight Centre share price in focus as full-year revenue surpasses $1 billion

The travel giant recorded a 154% improvement in revenue for FY22, returning to profit in the second half.

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Key points

  • The Flight Centre share price could be in for a big day on the market after the company dropped its FY22 earnings
  • The travel company recorded $1 billion of revenue, and its underlying EBITDA came to a $183.1 million loss – a 46% improvement
  • Flight Centre did not provide FY23 guidance

The Flight Centre Travel Group Ltd (ASX: FLT) share price is on watch after the company released its full-year earnings this morning.

Shares in the travel agency group closed Wednesday's session at $17.34.

Flight Centre share price on watch as TTV lifts 160%

Here are the key takeaways from the travel giant's financial year 2022 (FY22) results:

  • Revenue reached $1 billion ­– a 154% improvement on that of the prior corresponding period (pcp)
  • Earnings before interest, tax, depreciation, and amortisation (EBITDA) came to a $200 million loss ­– 53.7% higher than pcp
  • Statutory loss before tax of $377.8 million – a 37% improvement
  • Underlying loss after tax, meanwhile, was $272.6 million – a 25% improvement
  • Total transaction value (TTV) reached $10.3 billion – a 162% lift
  • The company hasn't returned to paying dividends yet.

Flight Centre's corporate and leisure travel businesses both returned to profit in the second half after a strong fourth quarter, driven by higher TTV.

On an underlying basis, the company posted an EBITDA loss of $183.1 million – a 45.8% improvement and within guidance.

It also recorded a $35 million underlying profit for the three months ended 30 June. However, its Asia geographical segment lagged, recording a loss for the quarter.

Its corporate segment outperformed in FY22, recording a $13.5 million profit for the year, with gross TTV exceeding pre-COVID levels six months earlier than anticipated. The company's leisure business also pulled through late in the year, bringing in a $10 million profit for the June quarter.

Flight Centre's costs averaged $120 million in FY22, compared to pre-pandemic levels of around $230 million.

Finally, it boasts $700 million of liquidity.

What else happened in FY22?

The market kept a close eye on Flight Centre last financial year as Australia's borders reopened and the Omicron variant swept the nation.

The company worked on its 'Grow to Win' strategy over the period, aiming to enhance its capabilities, retain customers, and win new accounts. It boasts a $2.5 billion pipeline of FY22 account wins.

In September, the Flight Centre share price lifted 0.5% when the company revealed plans to launch its travel management business in Japan in September. The stock dumped 10% over two days in October when the company dropped a trading update and issued $400 million of convertible debt.

What did management say?

Flight Centre CEO Graham 'Skroo' Turner commented on the company's earnings, saying:

After two years of unprecedented disruption to normal global travel patterns and other everyday activities, we are pleased to start FY23 with a considerably brighter outlook.

Travel demand has recovered rapidly since most governments globally removed or relaxed border restrictions and we have started the new fiscal year with strong momentum.

It is, of course, early days in the recovery and there is still considerable upside potential. For example, Australian outbound passenger departures tracked at just 35% of pre-COVID levels over the FY22 [second half], peaking at 60% in June.

What's next?

Flight Centre did not provide earnings guidance despite a strong start to FY23.

It blames its lack of outlook on the industry's ongoing rebound, continued travel restrictions in parts of the world including China, and unstable airline capacity and pricing.

It expects to be tracking close to its monthly pre-COVID TTV levels by the end of the period.

The company aims to translate between 40% and 50% of incremental revenue to EBITDA during its recovery phase. It will also target bottom-line improvements in FY23. Finally, it expects its full-year earnings to be weighted to the second half once more.

Flight Centre share price snapshot

The Flight Centre share price has delivered a turbulent performance lately.

The stock has slumped 7% since the start of 2022. Though, it has gained 6% since this time last year.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has fallen 8% year to date. It is down 7% over the past 12 months.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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