Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — FY2014 Earnings Presentation
52 slides from Flight Centre Travel's earnings presentation, Aug 27, 2014
Slide 1: 2014 Full Year Results Presentation
For personal use only 2014 FULL YEAR RESULTS PRESENTATION 27 AUGUST, 2014
Slide 2: Presentation Overview
PRESENTATION OVERVIEW For personal use only • Introduction - Haydn Long • Financial highlights and result drivers - Andrew Flannery • Global review - Graham Turner • Strategic update - Melanie Waters-Ryan • The future - Graham Turner • Questions • Appendices
Slide 3: Introduction
INTRODUCTION For personal use only • Growth Record Extended – New sales and underlying profit milestones established • Balance Sheet Strengthened – Record cash reserves, strong positive net debt position • Ongoing Expansion & Investment – Global network growth, key projects and strategies in place •
Slide 4: Financial Highlights & Result Drivers
For personal use only FINANCIAL HIGHLIGHTS & RESULT DRIVERS
Slide 5: 2013/14 Result Overview
2013/14 RESULT OVERVIEW For personal use only • 12.6% TTV growth to $16b = $1.7b year-on-year increase without significant acquisitions • 13% revenue growth to $2.2b • 9.7% underlying PBT growth to $376.5m • 9.8% underlying NPAT growth to $263.6m • Statutory PBT and NPAT impacted by positive and neg
Slide 6: Impact of Non-Recurring Items
IMPACT OF NON-RECURRING ITEMS For personal use only $’ million JUNE 2014 JUNE 2013 % Statutory Profit Before Tax $323.8m $349.2m (7.3%) Write-downs to goodwill & brand names $61.3m - - ACCC Fine $11.0m - - One-off gain within FCGP business ($19.6m) - - Building revaluation (prior year) - ($6.1m) - U
Slide 7: Margins & Costs
MARGINS & COSTS For personal use only • 14% income margin – up slightly • 2.35% net margin – down slightly, as expected • Invested 1.1% of TTV in sales & marketing – higher than FY14 but in line with normal spend • Rent and wage costs generally in line with expectations, given network growth • Despi
Slide 8: Cash & Cash Flow
CASH & CASH FLOW For personal use only • General cash up 10% to circa $476m – almost tripled in six years • Just $44.9m in debt – down almost $120m in six years • $431.2m positive net debt position (FY2013: $387.6m) • $227.1m operating cash inflow over full year • Year-on-year cash flow movement bro
Slide 9: Improved Shareholder Returns
IMPROVED SHAREHOLDER RETURNS For personal use only • Underlying EPS of $2.62 • Fully franked $0.97 per share final dividend • Total dividends for FY14 up 11% to a record $1.52 per share • 58% of underlying NPAT (74% of statutory NPAT) returned to shareholders
Slide 10: 2013/14 Results Summary
2013/14 RESULTS SUMMARY For personal use only $’ million JUNE 2014 JUNE 2013 % TTV $16.0b $14.3b 12.6% Revenue $2.2b $2.0b 13.0% Income margin 14.0% 13.9% 10bps Net margin (underlying) 2.35% 2.41% (6bps) Underlying Profit Before Tax $376.5m $343.1m 9.7% Non-recurring Items (see slide 6) ($52.7m) $6.
Slide 11: Global Review
For personal use only GLOBAL REVIEW
Slide 12: Operational Highlights
OPERATIONAL HIGHLIGHTS For personal use only • All countries profitable for 4th consecutive year • Record EBIT in Australia, UK, USA, NZ, South Africa, Singapore and Greater China • Record TTV in each country in local currency • 2500th shop and business opened July 2013 – about 1200 new jobs created
Slide 13: Australia
AUSTRALIA For personal use only • Sales and profits up in both leisure and corporate travel • Leisure results generally stronger, but profit growth slowed after Federal Budget • Queen Street Mall hyperstore profitable every month since opening • Hyperstore planned for Darwin during 1H15 and looking
Slide 14: UK
UK For personal use only • FLT's largest profit contributor after Australia • EBIT up 24% to $39.8m – solid leisure and corporate growth • Network includes: – Standalone (boutique) shops; and – Flagship locations housing two or more teams • Nine hyperstores now in place, including four in London • R
Slide 15: USA
USA For personal use only • TTV exceeded $AUD2billion (2nd largest region by sales) • EBIT up 16% to $12.7m – 4th consecutive year of profit • Corporate business generated 44% of total US sales and on track to surpass $1b in TTV during FY15 • Corporate Traveller opened in Atlanta & Miami (now 17 cit
Slide 16: Rest of the World Segment
REST OF THE WORLD SEGMENT For personal use only • Strong performance in NZ and South Africa – NZ EBIT exceeded 2003 record, TTV finished just below $NZD1b • Record results from emerging China & Singapore businesses – Leisure profits in Hong Kong and Singapore • Good top-line growth in Canada, but pr
Slide 17: Bikes
BIKES For personal use only • Pedal Group JV generated $45.6m in sales, up 26%, and almost $2.1million in EBIT • Retailer 99 Bikes growing and performing well – now has 17 shops, plus web-store • Three additional shops planned for 2014/15 • Wholesaler ATA imported more than 45,000 bikes • Bicycle Ce
Slide 18: 2013/14 Result by Country
2013/14 RESULT BY COUNTRY For personal use only CANADA UNITED KINGDOM INDIA GREATER CHINA TTV: $1.1b, up 13% in TTV: $1.5b, up 29% in TTV: $335m, up 6% in TTV: $196m, up 25% AUD (up 8% in lc) AUD (11% in lc) AUD (up 6% in lc) in AUD (up 12% in lc) EBIT: $0.4m EBIT: $39.8m EBIT: $3.5m EBIT: $2.3m BUS
Slide 19: Strategic Update: Travel Agent to Retailer
For personal use only STRATEGIC UPDATE TRAVEL AGENT TO RETAILER
Slide 20: Our Killer Theme
Our Killer Theme For personal use only Brand and A Sales and Marketing Unique Product: Experts, not Agents: Redefining the Shop: Blended Access: Information is Power: specialisation: Machine: Evolving our brands to Making, combining and Ensuring each brand’s Ensuring corporate, Ensuring FLT’s brands
Slide 21: Travel Agent to Travel Retailer
TRAVEL AGENT TO TRAVEL RETAILER For personal use only TRAVEL THE PROVIDERS CUSTOMER
Slide 22: 1) Brand & Specialisation
1) BRAND & SPECIALISATION For personal use only What do we have that’s special? What do we know that’s special? What do we do that’s special?
Slide 23: Brand & Specialisation
BRAND & SPECIALISATION For personal use only The CVP is not a set of marketing statements It is a clear statement of what a brand business has and does that the customer values
Slide 24: 2) Our Own Product
2) OUR OWN PRODUCT For personal use only We have great products from our partners BUT … We need to start manufacturing and promoting our own products (Hard and Soft)
Slide 25: Unique Product – FCB Red Label
UNIQUE PRODUCT – FCB RED LABEL For personal use only
Slide 26: Unique Products - Corporate Smart Stay
UNIQUE PRODUCTS - CORPORATE SMART STAY For personal use only The sm arte to book r way accomm your odation . Three va fe atures lu Valid ye e added inclu ar roun sions On our d flexible At no ex co tra cost! rporate rates benefit Increase d savin s Greate gs r pr Enhanc oductivity ed trave l experie
Slide 27: 3) Experts Not Agents
3) EXPERTS NOT AGENTS For personal use only Our sales people need to be experts in their brand’s specialised products HOLIDAY VACATION CRUISE EXPERTS EXPERTS EXPERTS AIR SME EXPERTS EXPERTS
Slide 28: 4) Our Shops Need to Be a Shop
4) OUR SHOPS NEED TO BE A SHOP For personal use only • A place we display our wares • A place where customers can touch and browse our products • A place where a counter no longer creates a barrier between the customers and our sales experts • A place that needs to have zones to reflect the differen
Slide 29: New Design Features
NEW DESIGN FEATURES For personal use only Overflow desks Changes in Flight Centre shop Departures Board Scribble Map Mobile Consulting Wholesale consultants Discovery Zone Product Zones Live Digital Content Toblerone Desks Open Frontage
Slide 30: 5) Blended Access
5) BLENDED ACCESS For personal use only Our business is always open when and how you want
Slide 31: Our Leisure Brands
OUR LEISURE BRANDS For personal use only Shops & Websites Need to enable our leisure customers to access their brand around the clock
Slide 32: 6) Information Is Power
6) INFORMATION IS POWER For personal use only PROFILES PATTERNS PREDICTIONS
Slide 33: 7) Becoming a World Class Sales & Marketing Machine
7) BECOMING A WORLD CLASS SALES & MARKETING MACHINE For personal use only • Generate more volume in enquiry and leads • Acquisition and retention • Targeted and personalised • Better marketing in the on and offline world
Slide 34: A Marketing Machine
For personal use only A MARKETING MACHINE
Slide 35: Our Noble Sales Purpose
For personal use only OUR NOBLE SALES PURPOSE “WE CARE ABOUT DELIVERING AMAZING TRAVEL EXPERIENCES”
Slide 36: The Future
For personal use only THE FUTURE
Slide 37: 2014/15 Guidance
2014/15 GUIDANCE For personal use only • Targeting $395m-$405m underlying PBT (excluding significant unforseen items) • Represents 5-8% growth on FY14 record underlying PBT • PBT will have doubled between June 30, 2010 and June 30, 2015 • Targeting 1H PBT broadly in line with PCP and accelerated 2H
Slide 38: Market Conditions
MARKET CONDITIONS For personal use only • Some ongoing volatility in Australian leisure • Impossible to predict timeframe for recovery • Short-term downturns are often followed by healthy uplifts in demand – cheap airfares a powerful demand driver • Cheapest advertised fares to top 10 international
Slide 39: Growth Opportunities
GROWTH OPPORTUNITIES For personal use only • Ongoing focus on Killer Theme and mini themes • Renewed focus on the customer and FLT’s NSP • Cheap international fares to stimulate demand in Australia • Ongoing focus on corporate travel and niche leisure in UK (premium and long-haul flights, tailor-mad
Slide 40: EuroGuru Program
EUROGURU PROGRAM For personal use only • US leisure initiative to increase share of Europe sales – $40b-a-year travel sector (larger than Australian outbound market) • Europe flight and travel enquiries now channeled to accredited ‘EuroGurus’ in Manhattan • Already delivering benefits • Europe sales
Slide 41: For personal use only
For personal use only
Slide 42: For personal use only
For personal use only Cheaper fares - Flight prices becoming more affordable More Choice - Broader selection of offerings Greater Comfort - Service, seats, food & entertainment Less Flying Time - Faster, more direct & more reliable
Slide 43: For personal use only
For personal use only Low cost carriers make travel affordable Traditional carriers responding – travellers the winners
Slide 44: For personal use only
For personal use only $1,170.00* = 85 Weeks pay of average worker $1,800.00* = 6 Weeks pay of average worker $1,359.00* = Less than one week’s salary * Prices based on a return flight from Sydney to London
Slide 45: For personal use only
For personal use only Relative cost of a flight from Sydney to London based on today’s average wage 1947 1980 2014 $130,000.00 $9,000.00 $1,800.00 Much lower than price should be if increased in line with inflation
Slide 46: Expansion Plans
EXPANSION PLANS For personal use only • 5-7% network growth target (organic expansion) • Complemented by strategic acquisitions • Vertical integration focus – capital-light businesses • Escape Travel franchise model to complement ET’s organic growth • Seven new franchises in place since model was re
Slide 47: Questions?
For personal use only QUESTIONS?
Slide 48: Appendices
For personal use only APPENDICES
Slide 49: Capital Management Position
CAPITAL MANAGEMENT POSITION For personal use only • Plan to retain sufficient company cash to cover 3 months' operating expenses • June 30 balance in line with plan, but traditionally decreases during 1H (dividends, tax instalments and normal, seasonal operating cash outflow) • Some cash likely to b
Slide 50: Five-Year Result Summary
FIVE-YEAR RESULT SUMMARY For personal use only JUNE 2014 JUNE 2013 JUNE 2012 JUNE 2011 JUNE 2010 TTV $16,049m $14,259m $13,238m $12,200m $10,894m Income margin 14.0% 13.9% 13.8% 13.8% 14.3% EBITDA $378.4m $395.2m $330.7m $256.9m $257.3m PBT $323.8m $349.2m $290.4m $213.1m $198.5m NPAT $206.9m $246.1
Slide 51: Corporate Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY For personal use only Job creation: About 1200 new jobs created during 2013/14 Employee earnings: FLT paid about $1billion in salaries and wages Health and financial well-being: On average, one health/financial consult conducted on every staff member Gender diversity:
Slide 52: Corporate Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY For personal use only Noble Selling Purpose: Initiated during 2013/14 and rolled out globally in July 2014 Community assistance: Flight Centre Foundation donated more than $1m in Australia alone Staff contribution: Volunteer leave program introduced - 1300 hours volun
Flight Centre Travel Group — FY2014 Earnings Presentation on 6ix