Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — H1 FY2020 Earnings Presentation
65 slides from Flight Centre Travel's earnings presentation, Feb 27, 2020
Slide 1: FY20 Half Year Result
ASX:FLT FY20 HALF YEAR RESULT ASX:FLT FY20 HALF YEAR RESULT 27 FEBRUARY 2020
Slide 2: Today's Presenters
ASX:FLT FY20 HALF YEAR RESULT TODAY’S PRESENTERS GRAHAM ADAM CHRIS MELANIE TURNER CAMPBELL GALANTY WATERS-RYAN Global MD and CEO Chief Financial Officer Corporate - CEO Leisure - CEO 2
Slide 3: Result Highlights
ASX:FLT FY20 HALF YEAR RESULT RESULT HIGHLIGHTS GRAHAM TURNER 3
Slide 4: Highlights: Result Overview
ASX:FLT FY20 HALF YEAR RESULT HIGHLIGHTS: RESULT OVERVIEW New records established in all geographic segments & in both corporate & leisure Record TTV of $12.4b (up travel 11.2%) 15%+ growth in Asia, Americas & EMEA, 6% growth in more mature ANZ markets Slightly above mid-point of guidance for the pe
Slide 5: Highlights: New Global Leadership Team
ASX:FLT FY20 HALF YEAR RESULT HIGHLIGHTS: NEW GLOBAL LEADERSHIP TEAM Graham Turner Melanie Waters-Ryan Chris Galanty Adam Campbell Global MD & CEO CEO - Leisure CEO - Corporate CFO Steve Norris Charlene Leiss James Kavanagh MD - EMEA MD - Americas MD - Australia 5
Slide 6: Highlights: Growth in a Challenging Climate
ASX:FLT FY20 HALF YEAR RESULT HIGHLIGHTS: GROWTH IN A CHALLENGING CLIMATE Brexit Trade Wars Hong Kong unrest Safety concerns in Dominican Republic (circa $US5million impact on US leisure results during period) Soft trading cycle in some key markets – slowest growth in Australian outbound travel sinc
Slide 7: Financial Results
ASX:FLT FY20 HALF YEAR RESULT FINANCIAL RESULTS ADAM CAMPBELL 7
Slide 8: Record TTV of $12.4b
ASX:FLT FY20 HALF YEAR RESULT RECORD TTV OF $12.4B 17% • Corporate travel brands generated almost TTV Contribution 40% of group TTV (%) corporate • Americas again growing strongly & now FLT's Leisure Corporate Experiences & Other growth to largest corporate business but with less than 2% market-shar
Slide 9: Strongest 1H Sales Growth Since FY16
ASX:FLT FY20 HALF YEAR RESULT STRONGEST 1H SALES GROWTH SINCE FY16 TTV ($b) $14.00 $12.00 $10.00 $8.00 $6.00 TTV ($b) $4.00 $2.00 $0.00 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31, Dec 31, 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Topped prior year record by ci
Slide 10: Continued Corporate Growth Globally
ASX:FLT FY20 HALF YEAR RESULT CONTINUED CORPORATE GROWTH GLOBALLY By TTV FLT’s corporate business has grown CORPORATE TTV at a 16.11% CAGR over the past decade & is CONTRIBUTION BY REGION now 4.5x the size it was 10 years ago (1H FY20) 0% Segment FY20 1H % of Corp FY10 1H % of Corp CAGR TTV TTV TTV
Slide 11: $102.7m Underlying PBT
ASX:FLT FY20 HALF YEAR RESULT $102.7M UNDERLYING PBT Slightly above mid-point of 1H guidance ($90m-$110m) Compares to $140.4m underlying PBT achieved in superior trading conditions during FY19 1H $63.9m in non-recurring 1H adjustments during FY20 leading to $38.8m statutory PBT Record 1H contributio
Slide 12: 1H Movement in Underlying Segment PBT
ASX:FLT FY20 HALF YEAR RESULT 1H MOVEMENT IN UNDERLYING SEGMENT PBT Segment 1H Movement in Underlying Contributing Factors Segment PBT ($AU) • Poor results from in-destination businesses • $5million interest swing (lower yields, lower cash balance following record FY19 Other ($18m) dividend returns,
Slide 13: Improved Cost Margin
ASX:FLT FY20 HALF YEAR RESULT IMPROVED COST MARGIN 11% Underlying Cost Margin 12.40% 12.20% 12.00% 11.80% 11.60% 11.40% 11.20% Underlying Cost 11.00% Margin 10.80% 10.60% 10.40% 10.20% 7bps improvement FY16 FY17 FY18 FY19 FY20 towards FY22 Target of 1H 1H 1H 1H 1H 10% Underlying cost margin excludes
Slide 14: Profit & Loss
ASX:FLT FY20 HALF YEAR RESULT TTV PROFIT & LOSS • Strong growth across all regions leading to record $12.4million TTV – 11.2% increase • TTV growth across both Corporate (17%) and Leisure (6.5%) businesses AUD $'m 1H FY20 1H FY19 Mvmt % Costs • Circa $160m growth in actual 1H costs, but growth cloud
Slide 15: Costs Significantly Impacted by FX, One-offs
ASX:FLT FY20 HALF YEAR RESULT COSTS SIGNIFICANTLY IMPACTED BY FX, ONE-OFFs Detailed cost analysis below does not include impairment charges or touring cost of sales Includes additional EBA impact in Australia of $5m (July-October) Increased sales & marketing activity focused on online brands i
Slide 16: Balance Sheet
ASX:FLT FY20 HALF YEAR RESULT BALANCE SHEET AUD $'m Dec-19 Jun-19 Mvmt % 1H Analysis Cash & cash equivalents 838 1,172 (29%) Financial assets 100 115 (13%) • Adoption of AASB 16 impacted Right of Use Assets Trade & other receivables 586 559 5% ($522m); current lease liabilities ($138m) and non- Cont
Slide 17: Cash Flow
ASX:FLT FY20 HALF YEAR RESULT CASH FLOW AUD $'m 1H FY20 1H FY19 Mvmt % 1H Analysis Operating activities • Adoption of AASB 16 improved operating cash flows by Operating activities before interest and tax (77) (129) 40% $73 million (operating lease payments now shown in Net interest and tax paid (59)
Slide 18: Segment Result: Australia–NZ
ASX:FLT FY20 HALF YEAR RESULT SEGMENT RESULT: AUSTRALIA–NZ AUD $'m HY20 HY19 Mvmt % AUSTRALIA TTV 6,318 5,982 6% • Record TTV in subdued trading cycle – growth in leisure and corporate sectors. • Emerging leisure brands and channels driving market-share gains, but External Revenue 769 747 3% not mat
Slide 19: Segment Result: Americas
ASX:FLT FY20 HALF YEAR RESULT SEGMENT RESULT: AMERICAS AUD $'m HY20 HY19 Mvmt % USA • Record TTV – again driven by corporate businesses – and second TTV 2,827 2,456 15% strongest 1H profit result (although down on PCP) • Strong pipeline of corporate account wins, including two Fortune 100 companies
Slide 20: Segment Result: EMEA
ASX:FLT FY20 HALF YEAR RESULT SEGMENT RESULT: EMEA AUD $'m HY20 HY19 Mvmt % UNITED KINGDOM TTV 1,916 1,595 20% • Record TTV – slightly above PCP - despite Brexit uncertainty • Successful cost focus – 1.5% increase in expenses in local currency • Strong SME corporate results from Corporate Traveller
Slide 21: Segment Result: Asia
ASX:FLT FY20 HALF YEAR RESULT SEGMENT RESULT: ASIA AUD $'m HY20 HY19 Mvmt % Greater China & Singapore TTV 1,187 885 34% • Record TTV & profit contribution in challenging 1H climate • Strong FCM results, highlighted by record profit & 10% TTV growth External Revenue 49 46 8% across the region Other I
Slide 22: Segment Result: Other
ASX:FLT FY20 HALF YEAR RESULT SEGMENT RESULT: OTHER AUD $'m HY20 HY19 Mvmt % • Reduced TTV & profit contribution in challenging 1H climate TTV 150 238 (37%) • FLT’s Global areas, along with The Travel Group (TTG) businesses External Revenue 147 167 (12%) (Touring, Hotel Management and DMC) Other Inc
Slide 23: Corporate Strategy Update
ASX:FLT FY20 HALF YEAR RESULT CORPORATE STRATEGY UPDATE CHRIS GALANTY 23
Slide 24: Corporate: Business Overview
ASX:FLT FY20 HALF YEAR RESULT CORPORATE: BUSINESS OVERVIEW Only large TMC with two brands, each with different models & Unique Approach offerings & delivering scalable, organic growth Market leading technology coupled with award winning people in Winning Blend of large market (FCM) & SME (Corporate
Slide 25: $US1.5 Trillion Addressable Market
ASX:FLT FY20 HALF YEAR RESULT $US1.5 TRILLION ADDRESSABLE MARKET FLT one of the world’s largest TMCs but has <1% market-share (based on ABTA data) 25
Slide 26: Unique Two Brand Approach
ASX:FLT FY20 HALF YEAR RESULT UNIQUE TWO BRAND APPROACH 26
Slide 27: FLT's Market Position
ASX:FLT FY20 HALF YEAR RESULT FLT’S MARKET POSITION Number of Customers Today Customer Characteristics ENTERPRISE Enterprise with multiple strong key markets 2-8 > $100M spend High volume, heavily automated GLOBAL Global with multiple operating 15 - 25 > $50M spend countries. Medium volume REGIONAL
Slide 28: Global Footprint
ASX:FLT FY20 HALF YEAR RESULT GLOBAL FOOTPRINT 28
Slide 29: FCM Sales Performance YTD Jan 2020
ASX:FLT FY20 HALF YEAR RESULT FCM SALES PERFORMANCE YTD JAN 2020 New Business Wins ($USb) $US940m In New Account Wins YTD 1.2+ 1.1 TOP 6 FY20 (USD) 0.95 0.85 US Based 200,000,000 US Based 94,000,000 DE Based 40,000,000 FR Based 30,000,000 Asia Based 20,000,000 Asia Based 17,000,000 2017 2018 2019 20
Slide 30: Corporate Traveller Key Priorities 2020
ASX:FLT FY20 HALF YEAR RESULT CORPORATE TRAVELLER KEY PRIORITIES 2020 Consistent SME only focus Hyper investment in sales & marketing Launch of DBX mobile-first, traveller-first platform in US, CA and UK Deployment of robotics layer to increase productivity & enhance customer service Widest choice o
Slide 31: Corporate Traveller Strategic Initiatives
ASX:FLT FY20 HALF YEAR RESULT CORPORATE TRAVELLER STRATEGIC INITIATIVES Hybrid Personalization via Care Uplifted, our new strategic theme, Experience AI highlighting the expertise of our people fused with cutting edge technology Launch of the DBX platform that powers One Omni-channel Care Uplifted i
Slide 32: FCM Key Priorities 2020
ASX:FLT FY20 HALF YEAR RESULT FCM KEY PRIORITIES 2020 Increase investment in sales & account management teams Global rebrand (April 2020) Increase investment in market leading technology product Launch analytics upgrade to improve data insights Deployment of robotics layer to increase productivity &
Slide 33: FCM Strategic Initiatives
ASX:FLT FY20 HALF YEAR RESULT FCM STRATEGIC INITIATIVES Win Go-Live Retain On-going Grow FCM Re-brand Project Canvas Project CGAP Travel World Intelligent Data The re-positioning of the Streamlining of our customer In partnership with Concur, Our new technology story. Platform (IDP) FCM brand to bri
Slide 34: Australia-First Partnership with Uber for Business
ASX:FLT FY20 HALF YEAR RESULT AUSTRALIA-FIRST PARTNERSHIP WITH UBER FOR BUSINESS 34
Slide 35: Leisure Strategy Update
ASX:FLT FY20 HALF YEAR RESULT LEISURE STRATEGY UPDATE MELANIE WATERS-RYAN 35
Slide 36: Leisure: Business Snapshot
ASX:FLT FY20 HALF YEAR RESULT LEISURE: BUSINESS SNAPSHOT Largest business sector globally in TTV terms Large scale (mass market) offerings in Australia, NZ & South Africa with leading market-share Smaller, more specialised offerings in USA, Canada, UK & India Omni/Multi-channel offerings with a dive
Slide 37: Leisure TTV Growth During Transformation
ASX:FLT FY20 HALF YEAR RESULT LEISURE TTV GROWTH DURING TRANSFORMATION Established Australia, NZ & South Africa businesses delivering solid TTV growth Emerging/low cost models now materially influencing TTV growth in Australia but not yet driving profit growth Australia Flight Centre brand TTV flat
Slide 38: Strong Leisure E-commerce Growth
ASX:FLT FY20 HALF YEAR RESULT STRONG LEISURE E-COMMERCE GROWTH 46.5% TTV growth to $880m during 1H BYOjet Aunt Betty StudentUniverse Other Online FC.com.au Travel Money 5% 21% Growth predominantly driven by: 25% • Jetmax + 59.6% • flightcentre.com.au +54% • StudentUniverse + 19% 17% 4% 28% 38
Slide 39: Leisure: Current Challenges
ASX:FLT FY20 HALF YEAR RESULT LEISURE: CURRENT CHALLENGES Lack of Scale • Emerging businesses fast becoming meaningful contributors to group results but further (emerging investment required to scale & grow these quickly businesses) • Further M&A activity possible • System changes, new wage model, b
Slide 40: Leisure: Proactively Tackling Challenges
ASX:FLT FY20 HALF YEAR RESULT LEISURE: PROACTIVELY TACKLING CHALLENGES • Evaluating current businesses & all recent leisure moves to cement & refine choices as to our Longer Term winning moves over the next 5-10 years Review • Will determine the best capital allocation for investment based on custom
Slide 41: Leisure: Transformation Foci to Date
ASX:FLT FY20 HALF YEAR RESULT LEISURE: TRANSFORMATION FOCI TO DATE Focus on Winning Models Unique Products & Cost Base Irresistible Deals Key Achievements Consultant Network Performance Review & Productivity Customer Preferences (channel) 41
Slide 42: Leisure: Strategic Initiatives
ASX:FLT FY20 HALF YEAR RESULT LEISURE: STRATEGIC INITIATIVES FOCUS ON WINNING MODELS 1. Standalone Online Brands – BYOjet, Aunt Betty, StudentUniverse 2. Multichannel Flight Centre brand offerings 3. Home-based/Independent contractor model and ready- made packages 4. Leisure B2B growth 42
Slide 43: Leisure: Strategic Initiatives
ASX:FLT FY20 HALF YEAR RESULT LEISURE: STRATEGIC INITIATIVES Initiative Objective Outcome 1. Standalone online brands Rapid growth in single channel • Delivering strong top & Leveraging metasearch growth bottom-line growth • Circa 60% TTV growth globally during 1H • 90% profit growth Global online y
Slide 44: Leisure: Strategic Initiatives
ASX:FLT FY20 HALF YEAR RESULT LEISURE: STRATEGIC INITIATIVES Initiative Objective Outcome 2. Multichannel FCB offerings Australia, NZ, South Africa, Greater convenience/choice for • Rapid & profitable growth in Canada customers, channel focused on online TTV during 1H: commoditised product • +54% in
Slide 45: Leisure: Strategic Initiatives
ASX:FLT FY20 HALF YEAR RESULT LEISURE: STRATEGIC INITIATIVES Initiative Objective Outcome 3. Investment in new models • Home-based / Independent • Trial within the FLT brand • Strong growth trends Contractor portfolio • Businesses acquired in Australia • Capture share of growing global (Travel Partn
Slide 46: Ready-Made Packages
ASX:FLT FY20 HALF YEAR RESULT READY-MADE PACKAGES Rapidly growing travel category Ignite business on track to deliver about $250m (annualised) in FY20 TTV Highly productive model MyHolidays readymade package range to be made available through Flight Centre brand in Australia MyCruise brand
Slide 47: Leisure: Strategic Initiatives
ASX:FLT FY20 HALF YEAR RESULT LEISURE: STRATEGIC INITIATIVES Initiative Objective Outcome 4. Leisure B2B growth • Proactively target the leisure • Leverage our core capability in • Soft launch of Travel Junction B2B market product & distribution to grow “bed bank” business TTV externally • B2B expan
Slide 48: Leisure: 2-Speed Transformation Focus
ASX:FLT FY20 HALF YEAR RESULT LEISURE: 2-SPEED TRANSFORMATION FOCUS Speed 1 Spanning core Leisure business & focussing on operational effectiveness Focus on Core Australian Leisure Business • Operational improvements identified • Plans being executed within flagship Flight Centre brand • Network opt
Slide 49: Growth Horizons of the Future
ASX:FLT FY20 HALF YEAR RESULT LEISURE: 2-SPEED TRANSFORMATION FOCUS Speed 2 Market reviews/competitive analysis/consumer trends Growth Horizons of the Future Pivots & new models in Leisure focused on emerging Further brand portfolio alignment & future trends where value in market is shifting Acceler
Slide 50: Global Technology Transformation
ASX:FLT FY20 HALF YEAR RESULT GLOBAL TECHNOLOGY TRANSFORMATION Technology review finalised with Hudson Crossing (travel tech specialist) Recommendations agreed & now being implemented Business line technology structure being implemented in each of the new divisions Corporate / Leisure / Supply each
Slide 51: Outlook & Guidance
ASX:FLT FY20 HALF YEAR RESULT OUTLOOK & GUIDANCE GRAHAM TURNER 51
Slide 52: FY20: Outlook
ASX:FLT FY20 HALF YEAR RESULT FY20: OUTLOOK Tracking in line with guidance at December 31, 2019 & well placed to capitalise when trading cycle improves Corporate businesses delivering consistent & sustainable growth Ongoing focus on improving leisure profits – translating the solid TTV growth being
Slide 53: FY20: COVID-19 Impact to Date
ASX:FLT FY20 HALF YEAR RESULT FY20: COVID-19 IMPACT TO DATE Virus affecting global travel patterns – particularly in corporate sector Significant impact on FLT’s Greater China & Singapore corporate businesses this month (together generated about 2.5% of group TTV during 1H) Reduced activity from cor
Slide 54: COVID-19 Impacted Areas
ASX:FLT FY20 HALF YEAR RESULT COVID-19 IMPACTED AREAS • Corporate businesses heavily impacted but not • Significant impact material contributors to group • While corporate sector is heavily results (2.5% of 1H TTV) FLT'S China & Global weighted towards domestic travel, • Activity shutdown as part of
Slide 55: FY20: Guidance Amended to Reflect Current Uncertainty
ASX:FLT FY20 HALF YEAR RESULT FY20: GUIDANCE AMENDED TO REFLECT CURRENT UNCERTAINTY Initial full year guidance ($310m-$350m underlying PBT) predicated on conditions stabilising/ improving late in 1H & early in 2H – ahead of peak booking seasons Impossible at this stage to reliably quantify COVID-19’
Slide 56: COVID-19: FLT's Response
ASX:FLT FY20 HALF YEAR RESULT COVID-19: FLT’s RESPONSE FTL is well placed to weather the challenges posed by COVID-19 Healthy cash position & relatively low debt – peace of mind for customers Scale & diversity – ability to help clients switch to areas that are not significantly impacted Drawing on S
Slide 57: Past Experience: The SARS Effect on Travel
ASX:FLT FY20 HALF YEAR RESULT PAST EXPERIENCE: THE SARS EFFECT ON TRAVEL Outbreaks on multiple continents during FY03, high mortality rates compared to COVID-19 but fewer confirmed cases Contributed to 4-5 month slowdown in outbound travel – slowdown exacerbated by unrest in Middle East (US invasion
Slide 58: SARS: Short-Term Downturn Followed by Rapid Growth
ASX:FLT FY20 HALF YEAR RESULT SARS: SHORT-TERM DOWNTURN FOLLOWED BY RAPID GROWTH The SARS Impact: Australian Departures 600000 Strong growth throughout 2004 500000 400000 300000 200000 US invades Iraq SARS (Feb/Mar 2003) Recovery (Jul/Aug 2003) 100000 0 Jan Feb Mar April May June July August Sept Oc
Slide 59: Countering COVID-19's Impact
ASX:FLT FY20 HALF YEAR RESULT COUNTERING COVID-19’S IMPACT Balancing need to reduce costs in lower growth trading environment with ability to capitalise on opportunities when market recovers – maintain network strength Aggressive promotion of “unaffected” destinations including Australia, South Paci
Slide 60: Airfare Price Wars
ASX:FLT FY20 HALF YEAR RESULT AIRFARE PRICE WARS CHEAP DEALS TO STIMULATE DEMAND • $699 return fare from Sydney-LA advertised this week (no longer on sale) • $719 Qantas return fare currently available from Brisbane/Sydney/Melbourne to LA/San Francisco/Houston • Universal Traveller releases short-te
Slide 61: End of Presentation Questions?
ASX:FLT FY20 HALF YEAR RESULT END OF PRESENTATION QUESTIONS?
Slide 62: Appendix 1: Five-Year Result Summary
ASX:FLT FY20 HALF YEAR RESULT APPENDIX 1: FIVE-YEAR RESULT SUMMARY December December December December December 2019 2018 2017 2016 2015 TTV $12,399m $11,155m $10,154m $9,343m $9,182m Revenue margin 12.5% 13.1% 13.4% 14.0% 13.7% EBITDA $165.0m $167.3m $177.5m $143.8m $188.0m PBT $38.8m $127.4m $139.
Slide 63: Appendix 2: Results by Country / Region
ASX:FLT FY20 HALF YEAR RESULT APPENDIX 2: RESULTS BY COUNTRY / REGION CANADA UK REST OF EUROPE1 GREATER CHINA TTV: $790m, up 6.7% TTV: $1.1b, up 2.2% in TTV: $378m, up 165% TTV: $152m, down in AUD (up 1.4% in lc) AUD (up 2.2% in lc) in AUD (up 161% in lc) 9.5% in AUD AUD EBIT: $6.1m AUD EBIT: $26.2m
Slide 64: Appendix 3: Slowest Growth in Australian Outbound Travel Since GFC
ASX:FLT FY20 HALF YEAR RESULT APPENDIX 3: SLOWEST GROWTH IN AUSTRALIAN OUTBOUND TRAVEL SINCE GFC 7000000 6000000 5000000 4000000 Outbound departures 3000000 Growth Rates (%) 2000000 1000000 0 1.6% growth in short-term resident departures during FY20 1H (FY09 1H: 3.9%) 64
Slide 65: Appendix 4: Australia to US Price Wars
ASX:FLT FY20 HALF YEAR RESULT APPENDIX 4: AUSTRALIA TO US PRICE WARS DAY 1 DAY 2 DAY 3 Monday 24 Feb Tuesday 25 Feb Wednesday $900 26 Feb $800 $848 $700 Virgin Australia Melbourne to LA return $719 $719 $717 $709 $600 United Airlines Qantas $699 Virgin Australia Fares available until Qantas 3 March
Flight Centre Travel Group — H1 FY2020 Earnings Presentation on 6ix