Flight Centre share price on watch amid 565% half-year profit surge

Flight Centre shares could see some sizeable moves today after the ASX 200 travel stock reported on its half-year results.

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Happy couple looking at a phone and waiting for their flight at an airport.

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The Flight Centre Travel Group Ltd (ASX: FLT) share price is one to watch today after the S&P/ASX 200 Index (ASX: XJO) travel stock reported its half-year results for the six months ending 31 December (1H FY2024).

Flight Centre shares closed up 1.8% yesterday, ending the day trading for $21.73 apiece.

Here's what ASX 200 investors will be poring over this morning.

Flight Centre share price on watch amid profit boost

  • Underlying profit before tax of $106 million, up 565% from $16 million in 1H FY2023
  • Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of $189 million, up 99% year on year
  • Total transaction value (TTV) of $11.3 billion, up 15% from 1H FY2023
  • Fully franked interim dividend of 10 cents per share; no interim dividend was paid for FY 2023

What else happened during the half year for Flight Centre?

Atop the welcome return of the interim dividend, the Flight Centre share price could get a boost today with the company reporting a 1.30% improvement in its revenue margin to 11.4%.

Noting that key operational strategies have been executed and are gaining traction, management said cost margins of just under 10% were "well below historic levels" and set for further reductions.

The $11.3 billion in TTV for the half year represented the company's second-strongest start to a year, trailing only the first half of FY2020. And corporate TTV increased 16.8%, notching a new record $5.9 billion for the six months.

Capital expenditure for the six months came in at $49 million. This was primarily focused on technology and systems intended to enhance productivity and customer experience.

Among the big news for the half was the opening of Scott Dunn in New York. This gives Flight Centre a United States east and west coast presence. The company said that Scott Dunn continues to trade in line with expectations and will generate the bulk of its FY2024 profit during its peak second-half booking periods.

What did management say?

Commenting on the results that could move materially the Flight Centre share price today, managing director Graham Turner said:

At a time when discretionary budgets are typically tightening, travel remains an outlier and a priority spend for many. We are seeing ongoing solid demand for leisure and corporate travel, leading to our second strongest start to a year in TTV terms and accelerated activity in January and February, ahead of our busiest trading months…

We have capitalised on our current strength by investing $425million in capital management initiatives, including fully franked dividends for our shareholders, while also strengthening our systems and tech platforms and fast-tracking growth of emerging businesses that should become significant future profit generators.

What's next?

Looking at what could impact the Flight Centre share price in the months ahead, Turner said, "We are well placed for the full year as we approach our busiest trading months. We have good momentum and early 2H trading has been strong."

The company said that TTV is on track to surpass the record $23.7 billion result achieved during FY2019 "as leisure customers continue to prioritise travel and as the corporate business continues to win accounts to more than offset lower overall customer spend".

Due to a non-cash change unrelated to trading performance, Flight Centre increased its FY 2024 guidance for underlying profit before tax to between $300 million and $340 million, up from the prior $270 million to $310 million.

Flight Centre share price snapshot

As of market close yesterday, the Flight Centre share price was up 16% over 12 months.

Motley Fool contributor Bernd Struben 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. 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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