The Flight Centre Travel Group Ltd (ASX: FLT) share price is charging higher on Wednesday.
In morning trade, the travel agent company's shares are up almost 4% to $20.06.
This follows the release of the company's FY 2024 results before the market open.
Flight Centre share price races higher on FY 2024 results
- Total transaction value (TTV) up 8% to $23,744 million
- Revenue margin up 100 basis points to 11.4%
- Operating revenue up 19% to $2,711 million
- Underlying EBITDA up 58% to $478 million
- Underlying profit before tax up 130% to $320 million
- Dividends per share up 122% to 40 cents per share.
What happened during the year?
For the 12 months ended 30 June, Flight Centre posted an 8% increase in TTV to a record of $23,744 million. This was driven by both the leisure and corporate businesses delivering more than $1 billion growth year on year.
Flight Centre's operating revenue grew at the quicker rate of 19% to $2,711 million thanks to a 100 basis points increase in its revenue margin to 11.4%. The latter was driven by supplier margins stabilising and strategic initiatives to develop new revenue streams, increase ancillary sales and attachment, and broaden overall product mix.
Combined with a relatively flat underlying cost margin, this ultimately led to the travel agent delivering underlying profit before tax of $320 million for FY 2024. This is a 130% increase on the $139 million recorded in FY 2023 and is at the mid-point of its guidance range of $316 million to $324 million.
In light of its strong profit growth, the Flight Centre board approved a fully franked 30 cents per share final dividend for FY 2024. This brought its full year dividends to 40 cents per share, which is up 122% year on year.
Management commentary
Flight Centre's managing director, Graham Turner, was rightfully pleased with the company's performance in FY 2024. He said:
In an uncertain macro-economic and geopolitical climate, our business and the industry in general continued to grow – once again highlighting the sector's resilience and our strength as a diversified global travel company. We recorded circa $1.8billion YOY TTV growth and surpassed our record FY19 result – with a substantially leaner workforce and a structurally lower cost base, highlighting the strong productivity gains we have delivered in both leisure and corporate travel.
Our YOY growth was also achieved in a deflationary airfare environment, which saw average international economy airfares decrease by 6% globally and by 13% in Australia during the 2H. While this long-awaited deflation will impact short-term TTV growth rates, we view it as extremely positive given it makes travel more affordable for families in particular and is likely to drive volume growth into FY25.
Outlook
Management advised that it believes Flight Centre is well-placed to "capitalise on opportunities in a normal growth market during FY25 with strong brand network, strong balance sheet and improving margin profile."
It also revealed that Australian international ticket sales increased 18% in July as average economy fares decreased by 5% compared to July 2023.
However, specific guidance will be provided to the market at its annual general meeting in November.
