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Festival of financials as travel firms post full-year results

August 23, 2019 Headline News No Comments Email Email

Qantas, Air New Zealand, Flight Centre and Webjet were among travel-related companies to have posted their financial results yesterday for the year ended 30 June 2019, with highlights and comments below, plus various measures, including a Flight Centre strategy that will involve up to 30 Flight Centre shops closing.

QANTAS

Qantas reported a moderate fall in profits and blamed a rise in fuel costs for much of its 6.5% slide in net earnings.

The airline posted a statutory net profit of AUD 891 million, down from AUD 953 million last year.

“I’m pleased to report that the Qantas Group delivered an Underlying Profit Before Tax of AUD 1.3 billion and a Statutory Profit Before Tax of AUD 1.27 billion for Financial Year 2019,” chief executive Alan Joyce said.

“It’s a strong result – and it’s a particularly strong result when you consider some of the headwinds we managed in the year.

“Higher oil prices put our fuel bill up by over AUD 600 million.

“A lower Australian Dollar impacted us by more than AUD 150 million.

“And we had a AUD 92 million non-cash expense on provisions for items including employee leave provisions.

“There are some clear standouts in today’s figures:

  • Our revenue was at record levels.
  • Our debt is below the bottom of our target range; and
  • Our statutory earnings per share have remained at the record level we achieved last year.

“So, it’s fair to say we’re pleased with how the business is performing.

Main points in Qantas result:

  • Underlying Profit Before Tax: AUD 1.30 billion (down 17%)
  • Statutory Profit Before Tax: AUD 1.27 billion (down 6%)
  • Record revenue for the Group
  • Statutory Earnings Per Share: 54.6c (flat on last year)
  • Return On Invested Capital: 18.4%
  • Net free cash flow: AUD 1244 million
  • Shareholder return of 13 cents per share fully franked dividend, plus an off-market buyback of up to 79.7 million shares
  • AUD 1250 staff travel bonus for 25,000 non-executive employees, worth $32 million
  • Direct New York and London to Sydney research flights for Project Sunrise announced. 

 

AIR NEW ZEALAND

Air New Zealand announced pre-tax earnings for the 2019 financial year of NZD 374 million, compared to NZD 540 million in the prior period. Net profit after taxation was NZD 270 million and operating cash flow was NZD 986 million.

The result was driven by operating revenue growth of 5.3%, which was offset by a NZD 191 million increase in the price of fuel, as well as a temporary increase in operating costs “as the airline sought to improve network resiliency for its customers in the face of the global Rolls-Royce engine issues”, the ailrine said in an issued statement.

Chairman Tony Carter said the result represented the relentless focus and hard work of more than 12,500 Air New Zealanders, who have risen to the challenges this financial year has presented.

“While we are disappointed that we did not meet the expectations we first set for ourselves at the start of the financial year, the fact is we are operating in a different demand environment than we were 12 months ago. To have achieved a solid result despite these headwinds speaks volumes about the extraordinary dedication and commitment of our people.

“When we first saw signs that demand was slowing, we took immediate steps to review our network, fleet and cost base, to position the airline for success in a lower growth environment. While we have made progress, this work is still ongoing.”

 

FLIGHT CENTRE

Flight Centre’s full-year profit has crept up by a meagre 0.1% to AUD 263.8 million for the year and chief executive Graham “Skroo” Turner outlined a strategy that will involve up to 30 Flight Centre shops closing.

The strongest profit growth was mainly from overseas, with the company’s Americas business delivering 44% pre-tax profit growth.

Turner said a “leisure network review” that was currently underway aimed to right-size the Flight Centre Brand network in terms of both shops and people. He said it expected to see:

  • Up to 30 Flight Centre shops closed and an additional 30 converted to either Travel Associates or the new youth-focused Universal Traveller brand, depending on each shop’s location and customer base
  • An additional 30-40 leisure shops shifted to better sites
  • About 20 Flight Centre shop openings, including high profile hyperstores in the Melbourne and Perth central business districts; and
  • About 200 sales consultants added to the Flight Centre brand network over the course of the year to ensure each shop is appropriately staffed and to return the network to optimum staffing levels (about 5200 peo[;e) following a reduction in recent months.

Chairman Gary Smith said the company again delivered record sales, with total transaction value (TTV) for the 12 months to 30 June 2019 topping the record FY18 result by almost AUD 2 billion or 8.8%.

“Unfortunately, this solid TTV growth did not translate to the record profit we initially targeted,” Smith conceded, “although we did finish the year within our revised guidance range.

“While our international businesses and our corporate travel operations generally delivered solid profit growth, which is a very positive sign for the future, this growth was more than offset by soft Australian results in a fairly subdued trading cycle and during a period of significant disruption for the leisure business in particular.

Turner added that that while financial year 2019 was “not the year of record profit that we initially expected, we have started the new fiscal year with strong foundations and with reasonable growth prospects.

“There are, of course, some ongoing challenges to overcome, particularly in Australia, and we are working hard to address the issues that are adversely impacting results within this large and very important business.

“While our focus is on factors that we can control, we are facing some external challenges early in FY20, including the trading cycle in Australia and its impacts on leisure travel demand, uncertainty relating to Brexit in the UK and the recent unrest in Hong Kong.

“Our geographic and brand diversity help shield us from the impacts of events like these and are critical factors in our ongoing evolution. Throughout the company, we are balancing the need to deliver short-term results with the need to build and invest for the future, as evidenced by our significant ongoing spend in systems and technology and the further investment in our three core business divisions.

We remain focused on our FY22 transformation program targets and are making reasonable progress towards the TTV and cost margin goals. Our ability to achieve the 2% net margin target will largely be determined by our ability to stabilise and then improve Australian leisure results.”

 

WEBJET

Webjet Limited delivered a 43% increase in EBITDA (earnings before interest, tax, depreciation and amortisation) to AUD 124.6 million.

Revenue grew 26% to AUD 366.4 million and net profit after tax (NPAT) was up 46% to AUD 81.3 million (before acquisition amortisation (AA)). The company also announced a fully franked final dividend of 13.5 cents per share, bringing the total dividend for the year to 22 cents, an increase of 10%.

Following the acquisitions of both JacTravel and Destinations of the World (DOTW), the Company’s WebBeds business is now the largest business across bookings, TTV and EBITDA. WebBeds TTV was AUD 2.2 billion, up 59% over FY18 and EBITDA was AUD 67.3 million, up 148%, with strong growth coming through in all regions.

The Webjet Online Travel Agency (OTA) continues to outperform with flight bookings growing around twice the underlying market. Despite a tough domestic market in FY19, both TTV and EBITDA margins improved, increasing to 10.9% and 40.4% respectively.

KEY FINANCIAL HIGHLIGHTS FOFR WEBJET:

  • AUD 3.8 billion Total Transaction Value (TTV) – up 27%
  • AUD 366.4 million revenue – up 26%
  • AUD 124.6 million EBITDA – up 43%
  • 34.0% EBITDA margin – up 398 bps
  • AUD 81.3 million NPAT (before AA) – up 46%
  • 63.3 cents EPS (before AA) – up 31%
  • Full year fully franked dividend of 22 cents – up 10%

Commenting on the result, Webjet managing director John Guscic said: “FY19 was an outstanding year of profitable growth for Webjet – transacting AUD 3.8 billion in

TTV and delivering another record profit for our underlying business.

“It was a phenomenal year for our WebBeds business – in just over 6 years since launching

our start up in the Middle East, our global business is now delivering over AUD 2 billion in TTV.

“We continue to gain share and consolidate our position as the number-two global B2B player and our increased size and scale is allowing us to focus on pursuing more profitable growth, resulting in higher TTV and EBITDA margins coming through in all regions.

“Our results demonstrate that the investments we have made ahead of the curve to be well placed to pursue growth are now paying off in terms of increased bookings, TTV and EBITDA. The Webjet OTA brand continues to strengthen and gain share as the number-one OTA in the market.”

 

HELLOWORLD got in early and posted its results on Wednesday. See Growing Helloworld gets in first as full-year financials fly

Written by Peter Needham

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