Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — H1 FY2017 Earnings Presentation
61 slides from Flight Centre Travel's earnings presentation, Feb 23, 2017
Slide 1: Investor Presentation FY17 Half Year Results
For personal use only Investor Presentation FY17 HALF YEAR RESULTS
Slide 2: Agenda
Agenda For personal use only KEY HIGHLIGHTS Graham Turner (CEO) FINANCIAL RESULTS Adam Campbell (CFO) STRATEGIC UPDATE Melanie Waters-Ryan (COO) OUTLOOK Graham Turner (CEO) QUESTIONS
Slide 3: Results Highlights
RESULTS HIGHLIGHTS Strong sales growth For personal use only • Increased ticket sales in low yield environment, leading to record 1H TTV & outpacing market growth Improved productivity • TTV growth outpacing network growth rate, despite deflationary impacts on airfares – TTV per person increasing Bu
Slide 4: Market-Share Growth
MARKET-SHARE GROWTH For personal use only 1H FY17 12% 10% 8% 6% 4% 2% 0% FLT's International Australian FLT TTV GROWTH Ticket Sales Outbound Travel Growth (Australia) Growth
Slide 5: Productivity Gains
PRODUCTIVITY GAINS For personal use only TTV per person increasing in local currency compared to 1H FY16 Nation/Region Change Australia 1.2% New Zealand 5.2% South Africa 7.8% Europe 4.5% Canada 7.2% United States & Mexico 4.0% Greater China 6.5% India 6.5% UAE (10.7%) Singapore (4.8%)
Slide 6: Key Highlights: New revenue streams in FY17
KEY HIGHLIGHTS New revenue streams in FY17 For personal use only Acquisitions New Markets New Offerings Network of corporate Continental Europe Interest-free holidays travel businesses in Germany, Sweden, Namibia Expanded range of Norway, Denmark & Captain’s Packages Ireland (Leisure) (C
Slide 7: Becoming Truly Global
BECOMING TRULY GLOBAL 10 New Countries Since May 2014 For personal use only Sweden Norway Dec. 2016 Dec. 2016 Denmark Dec. 2016 Finland Dec. 2016 Germany Dec. 2016 Ireland May 2014 Netherlands Mexico Mar. 2016 Jul. 2015 Malaysia Nov. 2015 Namibia Jan. 2017 : FLT May 2014 : FLT expansion in the past
Slide 8: Agenda
Agenda For personal use only KEY HIGHLIGHTS Graham Turner (CEO) FINANCIAL RESULTS Adam Campbell (CFO) STRATEGIC UPDATE Melanie Waters-Ryan (COO) OUTLOOK Graham Turner (CEO) QUESTIONS
Slide 9: Financial Results: Group profit & loss
FINANCIAL RESULTS Group profit & loss For personal use only AUD 1H FY17 1H FY16 PCP change Continued TTV growth – 20th year-on- $m $m % year increase in 21 years since listing Group TTV 9,343 9,182 2% Operating revenue relatively flat – Operating revenue 1,236 1,243 (1%) Other revenue 15 15 (1%)
Slide 10: Consistent TTV Growth
CONSISTENT TTV GROWTH For personal use only GROWTH THROUGHOUT THE ECONOMIC CYCLE 10 8 6 4 TTV ($billion) 2 0 1H10 1H11 1H12 1H13 1H14 1H15 1H16 1H17
Slide 11: Income Margin
INCOME MARGIN For personal use only Decline in underlying income margin driven largely by product mix changes Lower corporate gross margins in Australia Corporate change driven by business Growth in online mix (growth in high leisure sales at profile but low margin accounts) & lower margins competit
Slide 12: 1H Challenges
1H CHALLENGES For personal use only Economic Under-Performance Airfare Deflation FX Fluctuations Uncertainty (Q1) in Some Countries Fares significantly cheaper Affecting overseas result Circa $2.9m decline in 1H Leading to soft July results than during PCP (discounting translation into AUD, profits
Slide 13: Impact of Cheap Fares
IMPACT OF CHEAP FARES For personal use only Opportunities Stimulates demand - stronger sales volumes Opportunities to increase land & other add-on sales Challenges Lower ticket prices leading to reduced TTV growth Lower revenue per transaction in leisure travel, given FLT typically earns a %
Slide 14: Segment Highlights
FINANCIAL RESULTS For personal use only Segment highlights Geographic & Business Diversity Record TTV in LC in 9 of FLT’s 10 countries & regions Growing in key markets ... Record profit in LC in Europe, South Combined North America & Africa & on Mainland China Europe TTV 30% Brand & geographic
Slide 15: Segment Results: Australia
FINANCIAL RESULTS Segment results For personal use only Australia Continued TTV growth – exceeded $5b for 1st time & sold travel valued at more AUD 1H FY17 1H FY16 PCP change than $27m each day on average $m $m % Accelerated ticket sales growth – TTV 5,084 4,860 5% international ticket numbers u
Slide 16: USA (including Mexico)
FINANCIAL RESULTS Record 1H TTV – exceeded $US1b for 1st USA (including Mexico) For personal use only time AUD 1H FY17 1H FY16 PCP change $m $m % Strong contributions from StudentUniverse & Corporate Traveller TTV 1,333 1,260 6% Increased leisure losses, reduction in External revenue 145 142 2
Slide 17: The US Micro-Store Model
THE US MICRO-STORE MODEL For personal use only 1st Liberty micro-store now open in Tysons Corner Mall (Virginia) & performing well 2 more planned for FY17 – Walt Whitman Mall (Long Island) & Annapolis (Maryland) Low fit-out costs + low staff requirements =cost effective entry to prime malls
Slide 18: Europe
FINANCIAL RESULTS For personal use only Europe Solid recovery after Brexit shock AUD 1H FY17 1H FY16 PCP change Record 1H TTV & profit in LC with $m $m % strong 2Q results & momentum TTV 919 1,092 (16%) Strongest ever profit recorded in External revenue 128 153 (16%) January 2017 Adjusted EBIT
Slide 19: Stronger European Footprint
STRONGER EUROPEAN FOOTPRINT For personal use only Corporate European Traveller corporate introduced in acquisitions to Netherlands strengthen FCM Presence in 5 key countries + proprietary online booking tool for SME customers Leisure offering BYOjet launched launched in & performing Dublin well Stud
Slide 20: Rest of World
FINANCIAL RESULTS For personal use only Reasonable results from established Rest of World businesses in South Africa (record profit in LC), Canada (continued AUD 1H FY17 1H FY16 PCP change improvement & reduced losses) & NZ $m $m % TTV 1,826 1,781 3% Expansion into Namibia External revenue 207 2
Slide 21: Targeting Asia
Implementing TARGETING ASIA flatter regional management Corporate Traveller launched in key structure in markets during 1H Eastern Asia - to target SME centralised customers – For personal use only functions, IT Singapore, Hong solutions & Kong & UAE 1. Flatter reduced costs 2. Corporate Structure T
Slide 22: Other
FINANCIAL RESULTS For personal use only Segment relates to items that are not Other allocated to geographical segments AUD 1H FY17 1H FY16 PCP change 1H FY16 TTV & revenue results include $m $m % the $11m ACCC refund TTV 181 188 (4%) External Revenue 130 140 (7%) Year-on-year EBIT swing brough
Slide 23: 1H FY17 Results by Country
FINANCIAL RESULTS 1H FY17 Results by Country For personal use only Canada Europe India Greater China TTV: $919m, down 16% TTV: $206m, up 1% TTV: $136m, up 2% TTV: $586m, down 2% in in AUD (up 6% in lc) in AUD (up 8% in lc) in AUD (up 7% in lc) AUD (up 3% in lc) AUD EBIT: $17.7m AUD EBIT: ($1.2m) AUD
Slide 24: Record 1H Cash Balance
RECORD 1H CASH BALANCE For personal use only Ongoing Cash Generation $449m $450m $400m $350m 1H FY17 1H FY16 $300m 1H FY15 $250m 1H FY14 FLT’s general cash & 1H FY13 $200m investments portfolio 1H FY12 $150m $125m has almost quadrupled 1H FY11 $100m since 1H FY09 1H FY10 $50m 1H FY09 Cash & Investme
Slide 25: Group cash flow
FINANCIAL RESULTS Group cash flow For personal use only AUD 1H FY17 1H FY16 Operating cash outflow recorded in line $m $m with FLT’s normal seasonality Operating activities Operating activities before interest and tax (83) (34) Cash accumulates during peak booking Net interest and tax paid (63)
Slide 26: Group balance sheet
FINANCIAL RESULTS Group balance sheet For personal use only Movement in financial assets & other current assets reflects changes made AUD Dec 16 Dec 15 during FY16 (2H) – external investments & $m $m repurchase agreement Cash & cash equivalents 1,010 1,042 Trade & other receivables 670 647 PPE &
Slide 27: Cap-ex
FINANCIAL RESULTS First Half FY17 Results For personal use only Cap-ex $8m increase in 1H cap-ex AUD 1H FY17 1H FY16 PCP change Reflects ongoing spend on: $m $m % PPE 53 47 11% Systems (including Microsoft Intangibles (internal) 13 11 24% Dynamics finance platform) Total capex 66 58 13% Next
Slide 28: Agenda
Agenda For personal use only KEY HIGHLIGHTS Graham Turner (CEO) FINANCIAL RESULTS Adam Campbell (CFO) STRATEGIC UPDATE Melanie Waters-Ryan (COO) OUTLOOK Graham Turner (CEO) QUESTIONS
Slide 29: Who Are We? Our Core Values
FLIGHT CENTRE TRAVEL GROUP WHO ARE WE? For personal use only OUR CORE VALUES IRREVERENCE EGALITARIANISM OWNERSHIP We take our business Everyone has the same seriously but not We take full responsibility opportunities, rights and ourselves. We respect our and treat the business as privileges. Self im
Slide 30: Our Strategic Anchors
FLIGHT CENTRE TRAVEL GROUP OUR STRATEGIC ANCHORS For personal use only Make it easy to buy from us Famous and thus lead distinctive Scalable growth to sticky and brands with deep customer expertise relationships
Slide 31: The Next Years
FLIGHT CENTRE TRAVEL GROUP THE NEXT 20 YEARS For personal use only Leisure Travel Retailing In-Destination Little Argas Travel (Acceleration) Experiences Corporate Non-Travel Travel Student & Youth
Slide 32: Leisure Travel
LEISURE TRAVEL For personal use only Targeted Digital growth along enhancements the P2P Index & growth Continued Improved success of new Productivity Expanding products distribution models Search & Book (Ignite acquisition, developing a home- Apps, new based model) & websites, new increasing market-
Slide 33: Travel Retailing... The P2P Index
TRAVEL RETAILING… THE P2P INDEX For personal use only Dominating The Leisure Travel Landscape OTA Contact Centres Multi-Team Stores Community Home Based Events • High volume, low • 24/7 telephone • Travel Expos, touch sales & assist. • Shopping centres • Hyper stores Discover Europe, • Model expandi
Slide 34: New Products: Expanded CP Range
NEW PRODUCTS: EXPANDED CP RANGE For personal use only
Slide 35: New Products: Interest Free
NEW PRODUCTS: INTEREST FREE For personal use only
Slide 36: In-Destination Travel Experiences
IN-DESTINATION TRAVEL EXPERIENCES For personal use only Buffalo Tours DMC (JV) performing well – on track for almost $2m FY17 profit (in 2nd full year) KEY Now handling FLT’s customers in 11 AREAS countries Tour Hotel Developing new & unique product Operations Opportunities offerings, now Top Deck’s
Slide 37: Corporate Travel
SAM CORPORATE TRAVEL deployed in USA & launched in For personal use only New tools & Europe this Building a products to week truly global strengthen TMC leading tech offering - Europe Strong acquisitions account wins Continued FCM Connect, expansion of proprietary Corporate online booking Traveller
Slide 38: FCM's Leading Tech Offerings
FCM’S LEADING TECH OFFERINGS For personal use only
Slide 39: FCM's Leading Tech Offerings
FCM’S LEADING TECH OFFERINGS For personal use only
Slide 40: SAM: Capturing Attention
SAM :] – CAPTURING ATTENTION For personal use only Article reproduced courtesy of TTG
Slide 41: FCM's Leading Tech Offerings
FCM’S LEADING TECH OFFERINGS For personal use only
Slide 42: Student & Youth
STUDENT & YOUTH For personal use only App bookings up 124% YoY Student Flights in Australia Aiming to become the global leader in a fragmented market $186B Global Developing strong Market on and offline services StudentUniverse growing rapidly
Slide 43: Non-Travel
NON-TRAVEL For personal use only Operating in sectors that are adjacent to travel or using the FLT business model Travel Money • Continued growth • On track to become 4th brand to top $1b in TTV in Australia in FY17 Pedal Group • 99 Bikes retail chain & wholesaler Advance Traders Australia • Set to
Slide 44: Little Argas (Invest)
LITTLE ARGAS (INVEST) For personal use only Partnered with Named after first Travel Startups, TopDeck bus Fishburners, Little Tokyo and more LITTLE Working with ARGAS (www.littleargas.com) external parties to First strategic identify investments made; opportunities - Claire sales & solving business
Slide 45: Enhanced Digital Presence
ENHANCED DIGITAL PRESENCE For personal use only Global chief digital officer appointed DIGITAL Developed Investing in Boston-based platforms and centre of building network of excellence for OTAs and digital digital commerce services Delivering rapid growth in online sales and mobile app usage
Slide 46: Enhanced Digital Presence
ENHANCED DIGITAL PRESENCE For personal use only New transactional websites (UAE & StudentUniverse South Africa) to $1B launch during 2H ONLINE TTV BYOjet (now in TARGET flightcentre.com.au four countries) Aunt Betty
Slide 47: Enhanced Digital Presence
ENHANCED DIGITAL PRESENCE For personal use only StudentUniverse seeing 124% YoY growth in mobile bookings NATIVE APPS New apps deployed for FC Australia and FC USA
Slide 48: Agenda
Agenda For personal use only KEY HIGHLIGHTS Graham Turner (CEO) FINANCIAL RESULTS Adam Campbell (CFO) STRATEGIC UPDATE Melanie Waters-Ryan (COO) OUTLOOK Graham Turner (CEO) QUESTIONS
Slide 49: FY17 Guidance
FY17 GUIDANCE For personal use only External factors that 1H profit guidance impacted 1H results – achieved airfare pricing, FX – yet to abate Now expecting underlying FY17 PBT Amended guidance - towards bottom or $300m-$330m below initial target underlying PBT range
Slide 50: Positive Momentum But Some Ongoing Uncertainty
POSITIVE MOMENTUM BUT SOME ONGOING UNCERTAINTY For personal use only POSITIVE GUIDANCE X LEAD FACTORS INDICATORS US business Strongest Further likely to be monthly significant YTD Australian airfare price profitable by Increased TTV growth deflation? end of this exchange in January Record month rate
Slide 51: 2H Growth Drivers
2H GROWTH DRIVERS For personal use only TTV Growth Coach Touring Greater Stability & Continued Positive Productivity *Starting to track Momentum *$9.6m 1H profit against a similar decline had a low fare significant impact environment. on 1H results – *More rapid improvement growth possible if expect
Slide 52: Other Opportunities
OTHER OPPORTUNITIES For personal use only NETWORK ONLINE SALES M&A EXPANSION GROWTH Further acquisitions Web businesses likely within key Cost effective & performing well growth sectors sensible growth plans in place across P2P Progressing towards Targeting corporate network $1b online sales
Slide 53: Impact of LCCs
IMPACT OF LCCs For personal use only Agreements in place with key players • Proactively working with major LCCs in Australia Full content online • Scoot, Jetstar, Air Asia X & Tigerair fares & ancillary products now available via flightcentre.com.au Solid sales growth • Increasing off a relatively s
Slide 54: Other Carriers Taking Off
OTHER CARRIERS TAKING OFF For personal use only 20% 18% 16% 14% 12% 10% FY11 FY16 8% 6% 4% 2% 0% LCC Market-share in Australia Gulf Carriers in Australia Chinese Carriers in Australia
Slide 55: Outlook - Airfare Pricing
OUTLOOK – AIRFARE PRICING For personal use only Major falls during FY16 Driven by rapid capacity Seat numbers increasing 2H and throughout FY17 growth during FY16 at a faster rate than 1H calendar year international travel Relatively stable in Jan Average fares expected 17 but volatily expected to b
Slide 56: Agenda
Agenda For personal use only KEY HIGHLIGHTS Graham Turner (CEO) FINANCIAL RESULTS Adam Campbell (CFO) STRATEGIC UPDATE Melanie Waters-Ryan (COO) OUTLOOK Graham Turner (CEO) QUESTIONS
Slide 57: Supplementary Info: 5-Year Growth Trajectory
SUPPLEMENTARY INFO For personal use only 5-Year Growth Trajectory AUD December December December December December 2016 2015 2014 2013 2012 TTV $9,343m $9,182m $8,138m $7,480m $6,593m Income margin 13.4% 13.7% 13.6% 14.1% 13.9% EBITDA $143.8m $188.0m $164.0m $179.3m $148.9m PBT $109.2m $156.9m $141.
Slide 58: Business Update: Ignite Travel Group
BUSINESS UPDATE For personal use only Ignite Travel Group Develops & distributes innovative leisure models including exclusive holiday packages, travel vouchers & rewards programs. FY16 Strategic Rationale: TTV $75m Access to unique product & distribution methods Staff 130 Procurement expert
Slide 59: Business Update: Europe corporate acquisition
BUSINESS UPDATE For personal use only Europe corporate acquisition Small & profitable corporate businesses formerly owned by European online travel agency eDreams ODIGEO FY17 Strategic Rationale: Expansion into 5 key countries TTV €110m (annualised) Strengthens FLT’s European operations Co
Slide 60: Disclaimer
Disclaimer For personal use only This presentation has been prepared by Flight Centre Travel Group Limited ABN 25 003 377 188 (FCTG). This presentation contains general background information about FCTG and its subsidiaries and their activities current as at 23 February, unless otherwise stated. Thi
Slide 61: Flight Centre Travel Group
FLIGHT,CENTRE TRAVEL GROUP
Flight Centre Travel Group — H1 FY2017 Earnings Presentation on 6ix