Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — FY2019 Earnings Presentation
69 slides from Flight Centre Travel's earnings presentation, Aug 22, 2019
Slide 1: FY19 Full Year Result
ELIGHT,CENTRE ASX:FLT FY19 FULL YEAR RESULT
Slide 2: Result Overview
RESULT OVERVIEW ADAM CAMPBELL CFO LIGHT,CENTRE 2
Slide 3: FY19 Result Overview
FY19 RESULT OVERVIEW TTV PBT GLOBALISATION CORPORATE AUSTRALIAN LEISURE Another record year In line with amended Strong results in key Continued Disappointing overall guidance overseas markets – out-performance in results particularly Americas sector with strong growth potential 3
Slide 4: Record TTV $23.7b
RECORD TTV $23.7b Exceeded record FY18 result by almost $2b & achieved 23rd year of TTV growth in 24 years since listing result Average of $65m in TTV per day globally Organic growth predominantly with small contribution from businesses that were acquired during FY19 8.8% year-on-year growth (up 6.4
Slide 5: Achieving Strategic Objectives: Productivity
ACHIEVING STRATEGIC OBJECTIVES: PRODUCTIVITY 19.9% $1,200,000 $1,150,000 productivity increase $1,100,000 since FY15 $1,050,000 $1,000,000 $950,000 $900,000 TTV/Person (AUD) $850,000 FY15 FY16 FY17 FY18 FY19 5
Slide 6: PBT $343.1m
PBT $343.1m Within amended guidance range ($335m-$360m) but below initial target underlying PBT Actual PBT slightly higher at $343.5m (FY18: $364.3m) Underlying result adjusted to exclude impacts of non-recurring gains & losses $29.8m impairment loss (Olympus) offset by $30.1m in non-recurring gains
Slide 7: Globalisation
GLOBALISATION International Profit & TTV weighted towards international businesses for the first time businesses driving growth Reflects strong growth overseas and soft Australian leisure results Record TTV in all countries and regions, apart from Nordics Record profit (AUD) in USA, Canada, UK, UAE,
Slide 8: Americas: Now an Earnings Powerhouse
AMERICAS: NOW AN EARNINGS POWERHOUSE Underlying 120 earnings in the 100 Americas have 80 increased $ million AUD almost 5-fold 60 since FY16 40 20 PBT 0 FY16 FY17 FY18 FY19 8
Slide 9: Corporate
CORPORATE Continued 15.2% TTV growth globally to record $8.9b out-performance Corporate brands generated 37.7% of group TTV Achieving scalable organic growth through Corporate Traveller (SME) & FCM (TMS) brands Investment in systems & products - Upside, Savi, Sam :] – to bolster world class offering
Slide 10: Corporate: Growing & Gaining Scale Globally
CORPORATE: GROWING & GAINING SCALE GLOBALLY Corporate TTV ($AUb) Corporate TTV By Region ($AUb) 10 3.5 9 3 8 7 2.5 6 2 5 4 1.5 3 1 2 1 0.5 0 0 Australia/New Americas EMEA Asia Zealand Corporate TTV ($AUb) FY19 Corporate TTV ($AUb) 10
Slide 11: Record Account Wins
% of New FCM TTV Won by Region Americas EMEA Asia ANZ RECORD ACCOUNT WINS 8% 36% 23% $1.3b+ globally for FCM alone during FY19 & circa $2b across corporate division 33% 11
Slide 12: Australian Leisure Challenges
AUSTRALIAN LEISURE CHALLENGES Key business drivers: Flat leisure TTV in subdued trading climate TTV bolstered by solid growth in new & emerging models & brands (traditional leisure TTV down circa 2%) • TTV Growth Increased Flight Centre Brand same store sales but with smaller network following
Slide 13: Investment in Newer Models Paying Dividends
INVESTMENT IN NEWER MODELS PAYING DIVIDENDS Online Independent Contractor Flash Sale / Ready-made Specialist Flight Centre Network Packages Brand businesses Flight Centre Business Travel, Circa $1.3b in TTV from online Businesses in Australia, NZ, Partnership with Ignite in Groups, RTW, First & Busi
Slide 14: Profit & Loss
PROFIT & LOSS AUD $'m FY19 FY18 Mvmt % TTV & Revenue Costs Group TTV 23,728 21,818 8.8% Record TTV across all Underlying cost growth in geographic segments, constant currency held to Operating revenue 3,055 2,923 4.5% largely driven by corporate 3% (excluding touring cost Total revenue 3,055 2,9
Slide 15: Successfully Slowing Cost Growth
SUCCESSFULLY SLOWING COST GROWTH 14 12 10 8 6 4 2 0 FY14 FY15 FY16 FY17 FY18 FY19 Underlying Cost Growth (% in constant currency) 15
Slide 16: Balance Sheet
BALANCE SHEET AUD $'m As at June 19 As at June 18 Mvmt % Assets Liabilities Cash & cash equivalents 1,172 1,273 (8%) Financial assets 115 204 (43%) Trade & other receivables 559 525 7% Reduction in cash balance Trade payables remain flat Contract assets 356 323 10% represents timing of wage year
Slide 17: Cash Flow Statement
CASH FLOW STATEMENT AUD $'m FY19 FY18 Mvmt % Cash flow from operating activities down on prior year due to additional Operating activities wage payments (EBA in Australia and Operating activities before interest and tax 371 404 (8%) move to weekly pays for Australian Net interest and tax paid (92)
Slide 18: Record Dividends
RECORD DIVIDENDS 0.98 $310.2 $ per share final dividend (declared today) million in funds returned to shareholders $3.07 per share in fully franked dividends returned to shareholders $ per share special dividend (declared Feb 2019) 1.49 0.60 $ per share interim dividend (declared Feb 19) 18
Slide 19: Segment Results: Australia-New Zealand (ANZ)
SEGMENT RESULTS: AUSTRALIA-NEW ZEALAND (ANZ) ANZ by Pillar - TTV AUD $'m FY19 FY18 Mvmt % Leisure & Online Corporate TTV 12,506 12,319 2% 24% External Revenue 1,568 1,607 (2%) Other Income 2 6 (57%) Costs (1,390) (1,367) 2% 76% PBT 181 246 (27%) PBT (underlying)1 179 254 (30%) ANZ by Nation - TTV Sa
Slide 20: Trading Overview: ANZ
TRADING OVERVIEW: ANZ Small increase in TTV to record $12.5b but offset by decline in revenue margin Signs of stabilisation in the Australian leisure revenue margin late in FY19, but in softening macro conditions which are slowing TTV growth Cost control has been effective with cost margin fla
Slide 21: Segment Results: Americas
SEGMENT RESULTS: AMERICAS Americas by Nation - TTV United States Canada AUD $'m FY19 FY18 Mvmt % Student Universe LATAM TTV 5,537 4,755 16% External Revenue 650 566 15% 7%1% Share of Associate (1) (2) (53%) 28% Costs (546) (493) 11% 64% PBT 102 71 44% Sales staff 2,629 2,592 1% Sales teams 461 461 -
Slide 22: Trading Overview: Americas
TRADING OVERVIEW: AMERICAS Americas profit contribution in excess of $100m Expansion in premium model in USA – 11 Travel AUD for the first time Associates shops now trading (includes 3 rebranded Liberty shops) TTV up 16% to circa $5.5b (23% of group total) IC model in place and referral mode
Slide 23: Strong & Sustainable Trajectory in US SME Sector
STRONG & SUSTAINABLE TRAJECTORY IN US SME SECTOR 700,000,000 600,000,000 Corporate 500,000,000 Traveller USA TTV ($US) 400,000,000 300,000,000 200,000,000 100,000,000 TTV ($US) 0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 23
Slide 24: Segment Results: EMEA
SEGMENT RESULTS: EMEA EMEA by Nation - TTV United Kingdom South Africa Europe UAE AUD $'m FY19 FY18 Mvmt % 4% 10% TTV 3,412 3,097 10% 19% External Revenue 441 420 5% Other Income 20 100% 67% Share of Associate 2 1 100% Costs (355) (342) 4% PBT 108 80 34% PBT (underlying)1 87 80 9% EMEA by Pillar - T
Slide 25: Trading Overview: EMEA
TRADING OVERVIEW: EMEA 10% TTV growth to $3.4b – circa 14% of group TTV UK business has responded well to Brexit with TTV increasing 4% and costs held flat, although uncertainty remains Investment in Germany start-up and 30 June acquisition of remaining 75% share in 3Mundi (France & Switzerlan
Slide 26: Segment Results: Asia
SEGMENT RESULTS: ASIA Corporate Asia by Pillar - TTV Leisure & Online Other/Support & Wholesale AUD $'m FY19 FY18 Mvmt % TTV 1,946 1,386 40% 43% 52% External Revenue 99 94 5% Costs (87) (89) (2%) 5% PBT 12 5 124% Sales staff 1,327 1,475 (10%) Asia by Nation - TTV Sales teams 194 194 - India Greater
Slide 27: Trading Overview: Asia
TRADING OVERVIEW: ASIA Fundamentals remained strong in FY19, leading to profit growth for the second year (a record $12m PBT) TTV growth of 40% being driven across all countries TTV across the region poised to top $2b during FY20 Revenue margin decline due to leisure rationalisation in FY18
Slide 28: Segment Results: Other
SEGMENT RESULTS: OTHER AUD $'m FY19 FY18 Mvmt % TTV 327 261 25% Segment result includes FLT’s Global areas, along with The Travel Group (TTG) businesses (formerly Travel Experience Network) External Revenue 298 235 27% Other Income 4 (1) (497%) Difference between statutory PBT and underlying Sha
Slide 29: Strategic Update
STRATEGIC UPDATE MEL WATERS-RYAN COO
Slide 30: Our Vision
OUR VISION TO OPEN UP THE WORLD FOR THOSE WHO WANT TO SEE LIGHT,CENTRE 30
Slide 31: Core Values
CORE VALUES EGALITARIANISM OWNERSHIP IRREVERENCE In our company, we believe that each We take full responsibility for our business and We take our business seriously individual should have equal privileges treat it as our own. Our people have the but not ourselves. We respect and rights. In all our
Slide 32: Our 2025 Vision
OUR 2025 VISION In 2025 FCTG will be a thriving global travel company with a distinctive, entrepreneurial culture, famous brands and winning models. We will amaze our customers across three core segments – corporate, leisure and at destination. 32
Slide 33: The Elements of Our Vision
FAMOUS BRANDS We obsess about having The elements brands that reflect their DNA, are visually distinctive, well known, of our vision – relevant, trusted and customer obsessed. shared across ENTREPRENEURIAL WINNING MODELS all divisions CULTURE Our distinctive culture of Models that are: Growing, Prod
Slide 34: Company & Transformation Goals (FY22)
COMPANY & TRANSFORMATION GOALS (FY22) 7 10 2 7% compounding annual An underlying* cost margin Return to a 2% TTV growth of less than 10% net profit margin * Excludes touring cost of sales 34
Slide 35: Transformation Phases
TRANSFORMATION PHASES YEAR 4-5 YEAR 2-3 YEAR 1 Dominate Invest Market leading business Focus Business engineering across models and brands Clean up our brands and our three core divisions our businesses 35
Slide 36: Leisure Division – Three Pillars, Two Paths
LEISURE DIVISION – THREE PILLARS, TWO PATHS MASS PREMIUM YOUTH ● Market leader and Specialist UK ● Specialist AU ● Growth in new models USA ● Unmanaged small business FCBT NZ ● Vertical expansion CAN ● Vertical specialist RSA ● Digitisation ASIA ● Digitisation 36
Slide 37: Leisure Strategies
LEISURE 01 Customer systems & centricity STRATEGIES 02 Digitisation (online/offline) 03 Product and pricing 04 Famous brands & modern marketing 05 Network 06 Model shift 37
Slide 38: Leisure Strategy
LEISURE STRATEGY 01 Customer systems & centricity • Reviews & NPS • Reward systems • Remuneration models • Lead management systems – RedConnect 02 Digitisation (online/offline) • Websites & Native apps • Consultant & customer collaboration tools eg. Trips (Umapped acquisition) • Payments & easy to b
Slide 39: Leisure Strategy
LEISURE STRATEGY 03 Product & Pricing • Product design – House of irresistible deals • FC Exclusives & Flash Sale • Full content – forefront of NDC • Service products – Price Drop Protection, Captain’s Packages • Channel pricing 04 Branding & Marketing • Membership & loyalty FCB Product Journey • Br
Slide 40: Leisure Strategy
LEISURE STRATEGY 05 Network • Ongoing evolution of shop models → hyper/flagship/community/satellite • Relocations and optimal positioning • Staffing & mix of staffing • Legacy cost base reduction 06 Model shift • Accelerated growth of emerging, winning models • Independent agent/ home based • Host →
Slide 41: Flight Centre Brand: Changing Sales Mix
FLIGHT CENTRE BRAND: CHANGING SALES MIX 70 Community shops continue to 60 generate the majority of FCB’s 50 sales but TTV is migrating towards 40 emerging/winning channels & models 30 20 % of FY17 TTV 10 Targeted % of FY20 TTV 0 Contact Centre & Community Store Flagships & Specialist Online Hypersto
Slide 42: FC 2.0 Program – Strategic Road Map
FC 2.0 PROGRAM – STRATEGIC ROAD MAP Membership Product Self Sales Modern & Pricing Service Tech Marketing Product Marketing Our consultants, We have RRP We offer numerous Invest in improved Move to a healthier sites and apps and a clear strategy post-booking self tech and processes mix of advertisin
Slide 43: Corporate Strategy – Our Brands
CORPORATE STRATEGY – OUR BRANDS BRANDS PROFILE SME • 7 equity countries (Australia, New Zealand, USA, Canada, UK, South Africa, India) • 3 regions (APAC, EMEA, Americas) TMS • • 21 equity countries 75+ partner countries • 6 countries/regions for cievents NICHE • (Australia, New Zealand, UK, USA, Can
Slide 44: Business Strategy Statements
BUSINESS STRATEGY STATEMENTS To grow our SME travel business … in To grow FCM to be the number one global markets where the FCTG culture will thrive. alternative to the mega TMCs by 2025… FCM We will blend our simple personalised offers globally consistent services focussing on service with the desi
Slide 45: Corporate Focus Areas
CORPORATE FOCUS AREAS STRATEGIES PRIMARY SECONDARY 01 Hyper investment in sales and marketing 04 A continued focus on cost reduction and efficiency gains 02 05 The continued development Investment in of market leading and technology unique products 03 Our people 06 Further geographic expansion 45
Slide 46: Hyper Investment in Sales and Marketing
01 HYPER INVESTMENT IN SALES AND MARKETING Record year in new business wins with $2b plus in new customer wins across our corporate travel brands/businesses Increased investment in business development managers, with 500 plus BDMs world wide Brand review underway for FCM Travel to better differentia
Slide 47: Investment in Technology
02 INVESTMENT IN TECHNOLOGY Record year of tech investment Investment and/or acquisition in SAM :], Claire, and Upside Corporate technology priorities • SME digital platform and on-line booking tool powered by • Deployment of salesforce CRM platform to front line FCM Upside technology in Northern He
Slide 48: Our People
03 OUR PEOPLE A core part of our offering and Proactively blended with systems customer value proposition and technology 48
Slide 49: Secondary Strategies
SECONDARY STRATEGIES 04 A continued focus on cost reduction and efficiency gains 05 The continued development of market leading and unique products 06 Further geographic expansion 49
Slide 50: The Travel Group (TTG) Structure
THE TRAVEL GROUP (TTG) STRUCTURE 50
Slide 51: TTG – Our Brands
TTG – OUR BRANDS BRANDS PROFILE KEY FOCUS AREAS ● Small group touring ● Back-Roads Touring market is the 55+ Global ● Youth of tomorrow focussed ● Topdeck targets 18 – 30s Touring ● Global B2B experiences brand ● The brand behind our partner’s brands Global DMC ● Transfers, in country experiences ●
Slide 52: TTG Strategies
TTG 01 One business DMC strategy – brand, platform, standard operating procedures STRATEGIES 02 New branding for hotels 03 Global platform for distribution businesses 04 The Travel Junction – external sales via a Travel Bank 05 Topdeck repositioning, product development & sales 52
Slide 53: TTG Strategies
TTG STRATEGIES 01 One Global DMC • New Discova brand launched early in FY20 • New platform implementation underway for enhanced distribution capability & efficiency • One business with one set of SOPs from 2 disparate businesses (Olympus & Buffalo) • Expansion – geographic & B2B sales model 02 Hotel
Slide 54: TTG Strategies
TTG STRATEGIES 03 Copernicus and Helio • New platform pilot in UK in Dec 2019 to commence global roll-out • Delivering next generation procurement & enhanced distribution capability • Aggregated and curated content for faster quoting and sales delivery for travel consultants • Enhanced product and p
Slide 55: TTG Strategies
TTG STRATEGIES 05 Global Touring – Topdeck and Back-Roads Touring • The world’s leading socially inclusive youth brand with social experiences for 18-30s • Small group touring expansion and growth • Global GSA sales strategy to develop new markets and grow channels • Back-Roads expansion to USA (Blu
Slide 56: Global Technology Transformation Program (IT & Digital)
GLOBAL TECHNOLOGY PROGRAM OBJECTIVES TRANSFORMATION Total visibility into all current projects, spends 01 PROGRAM (IT & DIGITAL) & outcomes A rationalised roadmap in line with business 02 priorities Working with US-based travel tech consultancy Hudson Crossing Identification of further required inve
Slide 57: Global Cost and Efficiency Program
GLOBAL COST AND EFFICIENCY PROGRAM Robotics & Head Office Real Outsourcing Support Costs Automation Estate Efficiency • Finance processes • Process roles • Optimising space • Continuing focus on all utilisation support costs • Some call centre • Ticketing functions • Sub-leasing excess real • Head c
Slide 58: Outlook
OUTLOOK | GRAHAMETURNER CEO LIGHT,CENTRE sz
Slide 59: FY20 Outlook
FY20 OUTLOOK Detailed targets Some ongoing uncertainty in key markets – Brexit in UK, soft market growth in to be released Australia, Hong Kong unrest, US-China trade war at AGM (Nov) In line with normal practice & will allow FLT to monitor Q1 trading conditions & results Longer term TTV growth targ
Slide 60: FY20 Growth Drivers: Globalisation & Diversity
FY20 GROWTH DRIVERS: GLOBALISATION & DIVERSITY Corporate and Again likely to be key contributors to group results international businesses Solid growth trajectory & relatively small share of large markets Strong & consistent growth in Americas with significant future potential Expanding EMEA footpri
Slide 61: FY20 Growth Drivers: Australia
FY20 GROWTH DRIVERS: AUSTRALIA Expecting Strategies in place to address issues that impacted FY19 performance stabilisation Margins stabilising, but some ongoing macro uncertainty Ongoing focus on costs & sales discipline in FCB and Universal Traveller Targeting higher growth channels & businesses t
Slide 62: Network Journey Our Approach
Consultant Market Review Customer Performance & Growth / Demographics & & Optimal Performance Buying Patterns Staffing Smarts Benchmarking (Specialisation) NETWORK JOURNEY NETWORK PLAN OUR APPROACH New Growth Opportunities (Right Brand, Right Location) Relocation Opportunities Model Pivots - (Satell
Slide 63: FY20: Network Review Almost Complete
FY20: NETWORK REVIEW ALMOST COMPLETE Expected Right shops in right locations with appropriate staffing levels outcomes About 30 Flight Centre shops likely to close (8-step filter process in place) About 30 FCB shops to be rebranded to Travel Associates or Universal Traveller About 200 new roles to b
Slide 64: FY20: Recent Developments
FY20: RECENT DEVELOPMENTS LEISURE CORPORATE TEN / TTG • More aggressive push into Aussie youth • Further global network development – • New global brands created in DMC (Discova) sector with StudentUniverse and Universal ownership interest increased to 100% and hotels sectors Traveller launched in b
Slide 65: Questions?
ASX:FLT FY19 FULL YEAR RESULT me URSTIONS? FLIGHT.CENTRE = 65 oF Travel GROUP"
Slide 66: Five Year Result Summary
FIVE YEAR RESULT SUMMARY June June June June June 2019 2018 2017 2016 2015 TTV $23,728m $21,818m $20,109m $19,305m $17,598m Income margin 12.9% 13.4% 13.8% 13.7% 13.6% EBITDA $427.3m $442.2m $402.1m $413.9m $417.0m PBT $343.5m $364.3m $325.4m $345.0m $366.3m PBT (underlying) $343.1m $384.7m $329.5m
Slide 67: Overseas Businesses Driving TTV
OVERSEAS ANZ Other 4% BUSINESSES 9% DRIVING TTV EMEA GROWTH 16% Americas 42% 91% of FLT’s FY19 TTV Asia 29% growth came from outside ANZ 67
Slide 68: Results by Country / Region
RESULTS BY COUNTRY / REGION CANADA UK REST OF EUROPE1 GREATER CHINA TTV: $1.6b, up 8% in TTV: $2.3b, up 8% in TTV: $340m, up 24% in TTV: $317m, up 4% in AUD (up 4% in lc) AUD (up 4% in lc) AUD AUD AUD EBIT: $24.0m AUD EBIT: $56.7m AUD EBIT: $2.1m AUD EBIT: $5.3m BUSINESSES: 195 BUSINESSES: 259 BUSIN
Slide 69: Other FY19 Highlights: M&A
OTHER FY19 HIGHLIGHTS: M&A Seven strategic LEISURE CORPORATE TEN / TTG acquisitions completed to: Strengthen FLT’s global corporate travel footprint Sam :] (ETSC) Claire Camakila and capabilities Umapped Casto (hotel lease) Enhance the customer offering Upside 3Mundi Deliver new revenue streams 69
Flight Centre Travel Group — FY2019 Earnings Presentation on 6ix