Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — FY2013 Earnings Presentation
37 slides from Flight Centre Travel's earnings presentation, Aug 27, 2013
Slide 1: 2013 Full Year Results Presentation
For personal use only 2013 Full Year Results Presentation 27 August, 2013 1
Slide 2: Presentation outline
Presentation outline For personal use only Introduction Haydn Long (Investor relations) 2012/13 In Review Andrew Flannery (CFO) Travel Agent to Travel Retailer Melanie Waters‐Ryan (COO) Outlook – 2013/14 Graham Turner (CEO) Questions 2
Slide 3: Introduction
Introduction For personal use only FLT’s growth record extended during 2012/13 Record financial results achieved – PBT has exceeded prior year 16 times in 18 years since listing Strong shareholder returns – 5th best performing ASX Top 200 stock during 2012/13 (based on market cap growth) Ong
Slide 4: 2012/13: Result snapshot
2012/13: Result snapshot For personal use only 7.7% TTV growth to $14.3b – sales growth exceeded network growth rate 18.2% underlying PBT growth to $343.1m (actual PBT up 20.3% to $349.2m) 20% underlying d l i NPAT growth th tto $240 $240m ((actual t l NPAT up 23% tto $246 $246.1m) 1 ) Inves
Slide 5: 2012/13: Solid cash performance
2012/13: Solid cash performance For personal use only $1.26b global cash and investment portfolio at June 30, 2013 Includes $433.8m in general funds (company cash) – up from $400.8m at June 12 and $160.9m at June 09 Debt lowered to $46.2m after $USD60m loan repaid (Liberty acquisition) Stron
Slide 6: 2012/13: Improved shareholder returns
2012/13: Improved p shareholder returns For personal use only 250c 150c EPS 246c DPS 125c 137c 200c 200c 100c 112c 150c 140c 140 140c 75c 84 84c 100c 70c 50c 50c 25c 38c 9c 0c 0c 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 50 Share Price 40 Record EPS of $2 $2.46, 46 up 23% 30 Record DPS o
Slide 7: 2012/13: Result summary
2012/13: Result summary For personal use only RESULTS IN BRIEF JUNE 2013 JUNE 2012 Variance % $’ million $ TTV $14.3b $13.2b 7.7% Gross Profit $1,986m $1,827m 8.7% Income margin 13 9% 13.9% 13 8% 13.8% 10bps Net margin (underlying) 2.4% 2.2% 20bps Profit Before Tax ((actual)) $349.2m $ $290.4m $ 20.
Slide 8: 2012/13: Five-year growth trajectory
2012/13: Five‐year growth trajectory For personal use only JUNE JUNE JUNE JUNE JUNE 2013 2012 2011 2010 2009 TTV $14,259m $13,238m $12,200m $10,894m $11,242m Income margin 13.9% 13.8% 13.8% 14.3% 13.6% EBITDA $395.2m $330.7m $256.9m $257.3m $86.3m PBT $349 2m $349.2m $290 4m $290.4m $213 1m $213.1m
Slide 9: 2012/13: Result drivers
2012/13: Result drivers For personal use only Business growth 5% sales network expansion – 27% growth in corporate and leisure BDMs 2500th shop opened in July 13, 500th corporate business to open in FY14 Traveller’ss 21st year) (Corporate Traveller Margin improvement Slight increase in income
Slide 10: 2012/13: Diversified earnings
2012/13: Diversified earnings For personal use only Sales growth in all 10 countries in local currency Record EBIT in Australia, UK, USA, Greater China and Singapore Combined overseas EBIT up 20% to circa $75million Mixing Mi i b business i with ith lleisure i – sales l growing i iin both b
Slide 11: 2012/13: Segment result – Australia
2012/13: Segment result – Australia For personal use only Record EBIT – surpassed quarter of a billion dollars for first time TTV up 9% and aiming for higher growth in future Good G d leisure l i results, lt particularly ti l l d during i 2H EBIT from niche leisure brands almost doubled duri
Slide 12: 2012/13: Segment result – UK
2012/13: Segment result – UK For personal use only $32million EBIT – result exceeded prior record (2011/12) by 32% Main profit driver outside Australia and third largest sales generator Gaining share in market that has contracted since 2009 recession Leisure and corporate profits both up, bu
Slide 13: 2012/13: Segment result – USA
2012/13: Segment result – USA For personal use only EBIT up 11% to record $10.9m – third consecutive full year profit Corporate the major driver (40% of TTV), Liberty and GOGO also profitable US corporate now FLT’s FLT’ largest l individual i di id l division di i i by b sales l outside id Aus
Slide 14: 2012/13: Segment result – rest of world
2012/13: Segment result – rest of world For personal use only New Zealand EBIT up 84% and 3rd largest profit contribution to FLT group during FY13 Estimated 25% travel agency market‐share and expanding in niche areas South Africa Good contribution – currency impact on EBIT and TTV growth trans
Slide 15: 2012/13: Results by country
2012/13: Results by country For personal use only SINGAPORE GREATER CHINA TTV: $81m, up 30% in TTV: $158m, up 33% CANADA AUD (up 27% in lc) in AUD (up ( 32% in lc)) EBIT: $1.6m TTV: $954m, up 14% EBIT: $1.5m UNITED KINGDOM BUSINESSES: 11 in AUD (up 14% in lc) BUSINESSES: 33 EBIT: $3.2m TTV: $1.2b, u
Slide 16: Killer theme: Travel agent to travel retailer
Killer theme: Travel agent to travel retailer For personal use only Flight Centre Limited is transitioning from a travel agent to a world class retailer of travel products to leisure and corporate customers Being a world class retailer means we are the brand/business people identify with and go to I
Slide 17: Killer theme: Travel agent to travel retailer
Killer theme: Travel agent to travel retailer For personal use only Killer theme is aligned to FLT’s longer term strategic “foci” and built around: 1. Brand and specialisation 2. Unique product 3. Experts, not agents 4. Redefining the shop 5 5. Blended access 6. Information as power 7. A sales and m
Slide 18: 1) Brand and specialisation
1) Brand and specialisation For personal use only Aim Evolving our brands to truly specialise in specific areas of travel and have clear customer value propositions (CVPs) Brands B d must beb able bl to answer three h questions i that h clearly l l illustrate ill why h they are the customer’s best a
Slide 19: 2) Unique product
2) Unique product For personal use only Aim Making, combining and sourcing exclusive FLT products and services, rather than simply selling suppliers’ products “O product “Our d – not just j someone else’s” l ’” Major initiatives/progress update Red Label Fares – exclusive Flight Centre airfares la
Slide 20: Unique product: Red Label Fares
Unique product: Red Label Fares For personal use only 20
Slide 21: Unique product: Interest-free packages
Unique product: Interest‐free packages For personal use only 21
Slide 22: 3) Experts, not agents
3) Experts, not agents For personal use only Aim Ensuring each brand’s people are experts in understanding the brand’s speciality and that they in turn are backed by “travel gurus”, who are readily available if additional expertise p is required q Major initiatives/progress update Brand‐based B d
Slide 23: 4) Redefining the shop
4) Redefining the shop For personal use only Aim Ensuring corporate, wholesale and retail spaces reflect that FLT’s people are retailers first and foremost, not office workers Major initiatives/progress update Hyperstore fit‐out – product zones etc Digital content on/offline Corporate travel h
Slide 24: Redefining the shop: NYC hyperstore
Redefining the shop: NYC hyperstore For personal use only 24
Slide 25: 5) Blended access
5) Blended access For personal use only Aim Ensuring FLT’s brands are always available to customers. They can touch, browse and buy FLT’s products when and how they want – online, offline, shop, p, email,, chat,, p phone or SMS Major initiatives/progress update Model M d lddeveloped l d and d refi
Slide 26: Blended access – milestones
Blended access – milestones For personal use only KEY STATUS ELEMENTS MILESTONES PHASE 1 Pre and post booking processes blended Customers able to enquire, pay and view itineraries online More products and services available online PHASE 2 Published international fares, global hotels On
Slide 27: 6) Information as power
6) Information as power For personal use only Aim Gaining a better understanding of customer habits and proactively using this information, thereby delivering and developing better products and increasingg FLT’s relevance to customers Major initiatives/progress update In‐house I h d data t team t
Slide 28: 7) A sales and marketing machine
7) A sales and marketing machine For personal use only Aim Ensuring each brand has the best and most BDMs, an advertising plan and deployment that delivers on the opportunity to increase market share Major initiatives/progress update Re‐marketing growth Direct response and advertising Digital
Slide 29: 2013/14: Guidance
2013/14: Guidance For personal use only Initially targeting $370m‐$385m PBT, assuming stable trading conditions and excluding any significant unforseen items Also excludes possible goodwill impairment (USA and/or India) Target represents 8‐12% growth on underlying 2012/13 PBT Tracking ahead
Slide 30: 2013/14: Australian growth priorities
2013/14: Australian growth priorities For personal use only Retail prosperity – improving front‐end performance and results in FLT’s largest business Blended travel Delivering a seamless customer experience Corporate travel recovery – strategies in place to fast‐track TTV growth Designing
Slide 31: 2013/14: The US dollar
2013/14: The US dollar For personal use only FLT does not expect AUD v USD FX shifts to significantly affect its business Consistent growth in overseas travel over 20+ years suggests Aussie outbound is structurally driven, not FX driven Supported by statistics taken from FLT’s Discover The Ame
Slide 32: 2013/14: The US dollar
2013/14: The US dollar For personal use only Circa 7% CAGR in Australian outbound departures between FY94 and FY13 Short‐term resident departures have increased 18 times during past 20 years Declines D li i FY02 and in d FY03 were nott caused d by b FX – 9/11, 9/11 SARS 9.0m Australian Short‐T
Slide 33: 2013/14: UK and USA growth
2013/14: UK and USA growth For personal use only UK Experienced management team in place with track record of success and blueprint to drive future growth Targeting 11% sales network growth, including new hyperstores in Victoria (London), Bristol and Leeds Work underway on blended retail trave
Slide 34: 2013/14: Other growth opportunities
2013/14: Other growth opportunities For personal use only New Zealand Aiming to build on successes of FY13 Plan to launch transactable Student Flights website Rapidly expanding Cruiseabout – targeting five new shops (13 by June 30) South Africa Targeting a get g 12% % bus business ess ggrowt
Slide 35: Capital management
Capital management For personal use only Internal goal to retain sufficient cash to cover three months operating expenses – circa $400m Cash balances currently exceeds this amount but will reduce during 1H14 (after dividend and tax instalment payments) May use cash to fund small acquisitions a
Slide 36: End of presentation
End of presentation For personal use only Questions? 36
Slide 37: Appendix 1: Average international yield (Aus)
Appendix 1: Average international yield (Aus) For personal use only No major change in average airfare prices during 2012/13 Average international fare remains well below pre‐GFC levels Statistics are based on GDS net ticketed revenue and do not include all g ((indicative of overall p airlines
Flight Centre Travel Group — FY2013 Earnings Presentation on 6ix