Flight Centre share price lifts off amid record full year sales prediction

ASX 200 investors are bidding up the Flight Centre share price today. But why?

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The Flight Centre Travel Group Ltd (ASX: FLT) share price is flying higher today.

Shares in the S&P/ASX 200 Index (ASX: XJO) travel stock closed yesterday trading for $20.59. In morning trade on Wednesday, shares are swapping hands for $20.89 apiece, up 1.4%.

For some context, the ASX 200 is up 0.24% at this same time.

This comes as investors mull over the trading update and presentation by Flight Centre CFO Adam Campbell at the Macquarie Conference.

Here are the highlights.

Flight Centre share price boosted on reaffirmed profit guidance

The Flight Centre share price is marching higher, with the company eyeing record sales for the full 2024 financial year (FY 2024). Campbell said the business was on track to exceed the previous record total transaction value (TTV) of $23.7 billion it achieved in FY 2019.

And despite impacting its year-on-year growth, Flight Centre lauded falling airfare prices as a "very positive development".

Campbell said that while international airfare prices were still above pre-COVID levels, they're now falling in Australia and "expected to stimulate further demand, particularly in leisure" travel.

The Flight Centre share price is also likely gaining support after the company reaffirmed its profit guidance, saying it expected strong year-on-year growth.

With trade said to be "broadly in line with expectations", management is continuing to target underlying profit before tax (PBT) in the range of $300 million to $340 million for FY 2024.

This compares to PBT of $106 million in FY 2023. Campbell highlighted that if Flight Centre achieved the midpoint of its targeted profit range, this would represent 200% year-on-year growth.

In another strong metric, Flight Centre reported improved margins. In the third quarter (Q3 FY 2024), the company's underlying PBT margin increased by 0.60% from Q3 FY 2023.

Campbell noted that revenue and cost margins were both tracking well ahead of the prior corresponding period. He added these were set for "further improvement as the market recovery continues and as key strategies gain traction, delivering operating leverage".

Among the positive emerging market trends, the company said its outbound capacity in April was tracking at 95% of pre-COVID levels in Australia.

A history of growth

Though still in recovery mode from the COVID blow, the Flight Centre share price has a history of growth.

That's been supported by the company's remarkable achievement of growing its TTV year-on-year 25 times in 29 years since listing. Campbell noted that two of the years it failed to grow TTV were during the pandemic closures.

Among the company's strengths, he cited that its leisure business was leveraged to outbound travel, noting this market had grown at a 5.9% compound annual growth rate (CAGR) over the 40 years pre-COVID.

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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