Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — FY2021 Earnings Presentation
61 slides from Flight Centre Travel's earnings presentation, Aug 26, 2021
Slide 1: FLT: Full Year Results Presentation (FY21)
FLT: Full Year Results Presentation (FY21) August 26, 2021
Slide 2: Today's presentation
Today’s presentation Adam Campbell Chris Galanty Melanie Waters-Ryan Graham Turner ● CFO ● Corporate - CEO ● Leisure - CEO ● Global MD / CEO ● Highlights & Financial ● Corporate Update ● Leisure Update ● Introduction and Outlook Results ● (Section 2) ● (Section 3) ● (Section 4) ● (Section 1) 2
Slide 3: FY21: Highlights
FY21: Highlights • Sales revenue increasing month-on-month – record COVID-period result in June 2021 Recovery gaining momentum – • Rapid leisure & corporate recovery in USA late in Q4-21 01 particularly in USA & corporate sector • • Corporate transaction numbers (tickets) at c.50% of pre-COVID level
Slide 4: FY21: Recovery gaining momentum during Q4-21
FY21: Recovery gaining momentum during Q4-21 Americas EMEA ANZ • Strong TTV rebound late in year. • Corporate recovery building during Q4- • ANZ Leisure Q4-21 TTV was 115% of • June 2021 TTV more than 2.5x the 21. 1H-21 Leisure TTV & more than triple average monthly TTV contribution • June 2021 mont
Slide 5: FY21: Strong & immediate rebounds
FY21: Strong & immediate rebounds Lift off in Transatlantic bookings since UK reopened to US Travel restrictions lifted 5
Slide 6: FY21: Investing to win market-share
FY21: Investing to win market-share Prioritising long-term success • Investing in key growth drivers, while maintaining tight rein on costs • Initial focus on costs & liquidity before focusing on growth as conditions stabilised Deploying game changing new corporate technology to enhance an already c
Slide 7: FY21: Successfully executing key strategies
FY21: Successfully executing key strategies Corporate business growing to win • Strong return on “grow to win” investments – $US1.4b pipeline in new accounts won (circa 70% to trade in the Americas & EMEA) with 98.5% client retention in FCM • Increased market-share & foundations in place for further
Slide 8: July 21: Global gross TTV tracking at 26% of pre-COVID levels
July 21: Global gross TTV tracking at 26% of pre-COVID levels Corporate 41%, Leisure 16% at July 2021 – significant leisure upside potential as international travel resumes Global TTV Recovery – July 2021 Leisure Corporate 70% 59% % of pre-COVID Gross TTV 60% 50% 40% 35% 32% 33% 30% 25% 20% 13% 13%
Slide 9: FY22: Ready for take-off
FY22: Ready for take-off Pre-COVID earnings leveraged to Americas & EMEA EMEA & Americas combined contribution to Group results 1H-20 2H-19 1H-19 0% 10% 20% 30% 40% 50% 60% Underlying Segment Result TTV Contribution 9
Slide 10: Lengthy liquidity runway – June 2021
Lengthy liquidity runway – June 2021 10
Slide 11: Cash outflow & one-off cash costs
Cash outflow & one-off cash costs Net cash outflow ($m) June 2021 Overview Hibernation operational costs (76.5) • Cash outflows predominantly in ANZ (lockdowns re-introduced) & within Capex (3.7) Global sectors (centrally held costs). Hibernation cash costs (80) • Americas business approaching Varia
Slide 12: FY21: Profit & loss
FY21: Profit & loss $m FY21 FY20 Mvmt FY21 Analysis Group TTV 3,945 15,303 (11,358) • Other income includes government support of $236m, of which $117m is offset by employee Operating revenue 396 1,897 (1,501) costs for stood down/furloughed employees. Total revenue 396 1,897 (1,501) • Cost reductio
Slide 13: FY21: Underlying cost base
FY21: Underlying cost base FY21 One- FY21 FY20 Total FY21 Analysis FY21 off Underlying Underlying • Cost reduction strategies implemented since Cost base ($m) Expenses Expenses Expenses Expenses Mvmt % March 2020 have resulted in a 59% reduction in underlying costs. Employee benefits (810) (194) (61
Slide 14: FY21: Balance sheet
FY21: Balance sheet $m June 2021 June 2020 (Restated) Mvmt Cash & cash equivalents 1,291 1,867 (576) FY21 Analysis Financial assets 65 8 57 • $1.4b cash and investments at 30 June 2021 Trade & other receivables 279 320 (40) ($119m restricted). Contract assets 50 97 (46) Other current assets 138 146
Slide 15: FY21: Cash flow statement
FY21: Cash flow statement $m FY21 FY20 (Restated) Mvmt FY21 Analysis Operating activities • Operating cash flows include government Operating activities before interest and tax (922) 37 (959) subsidies of $277m. Net interest and tax paid 10 (48) 58 Cash inflow from operating activities (912) (11) (9
Slide 16: Corporate Update
Corporate Update Chris Galanty 16 | FCTG Corporate
Slide 17: Corporate: Full year update and highlights
Corporate: Full year update and highlights Corporate Recovery ▪ Trading at 47% of pre-COVID transactions, despite several customers having essential travel only policy Customer Growth & Retention ▪ Continued organic growth with new wins of $1.4Bn USD, very strong pipeline. ▪ Customer retention >98%
Slide 18: Corporate travel outlook FY22
Corporate travel outlook FY22 Enterprise Industry outlook Top Flagship > $100M spend Global Multi-country > $50M spend Regional $10M-$50M spend Corporations return to Market evolution Local travel – 50-70% in FY22 ▪ Increased demand for TMC service, $<2 - $10M spend shift from supplier direct channe
Slide 19: Delivering on Key Priorities in FY21
Delivering on Key Priorities in FY21 Key Priority Delivery 1. Win and retain customers to grow market share 1. $1.4bn USD new wins and 98.5% Customer Retention (FCM) 2. Launch Melon in Corporate Traveller and deploy business model shift 2. Melon launched in US for existing customers, increased custo
Slide 20: Customer Funded Model
Where we play │ A two-sided model Customer Value Proposition Supplier Value Proposition Flight Centre DNA | Service & Savings Growth, Market Share | Yield Enterprise Top Flagship > $100M spend Volume Customer Funded Model Supplier Funded Model ▪ Global Scale and Consistency Global ▪ Flexibility Mult
Slide 21: Customer growth and retention
Customer growth and retention New Wins Organic Growth Retention $1.4bn USD in new customer wins Customer retention 98.5% Strong increase in pipeline Record number of customers RFPs (over 340% increase) 21 | FCTG Corporate 21
Slide 22: Strategy on a page
Strategy on a page Corporate Brands Corporate Traveller is the TMC that’s fanatical about SMEs and delivers Care FCM is The Alternative TMC for Multi-National Corporates. Two global differentiated winning brands Uplifted through the power of our people and technology The flexibility of its offering
Slide 23: Proprietary Tech
Proprietary Tech Putting customers first • In beta testing Hierarchy of needs have • Pilot customers in September 2021 changed for customers • Global availability in January 2022 • From cost to duty of care • From offline to digital service • From 9-5 to 24/7 • From simple to need for advice • Key f
Slide 24: FCM Platform China
FCM Platform China Global Strength, Local Mindset A bespoke solution for the China market with the knowledge of a global travel company: • A straightforward user interface • Designed for the China market • FCM controlled roadmap, driven by customer needs • Guaranteed data security • Best choice of C
Slide 25: Why we win – Global Category Leading Brands
Why we win – 2 Global Category Leading Brands The only alternative to The Worlds’ largest SME focussed TMC, offering a the traditional 3 TMCs unique blend of seamless offering global technology, dedicated experts, consistency, flexibility, strong culture and the widest strong culture, the widest cho
Slide 26: Leisure - CEO Melanie Waters-Ryan
Leisure - CEO Melanie Waters-Ryan
Slide 27: Leisure: Full year update and highlights
Leisure: Full year update and highlights Structural change complete • Shop & brand network rationalised - accessibility maintained for customers • New growth models - developed & deployed Positioning for recovery • Investment in leading digital technologies to enhance offering across all channels –
Slide 28: Leisure: Structural transformation of costs
Leisure: Structural transformation of costs • Rationalisation of shop network (planned as per Transformation program) • Easy and close access for our customers but reduced density. World Class World Class Shop Shop Network Network • Retention of higher sales and performing locations. • Reduction of
Slide 29: Leisure: Positioning for recovery
Leisure: Positioning for recovery Investments in core Product Design and Rejuvenation of Flight technologies and new Merchandising – Irresistible Centre our Iconic Famous models Deals brand • Global Online platform SOAR • Globalised network of product • Modernisation of Flight Centre for Flight Cent
Slide 30: Leisure: Flight Centre – Brand Strategy
Leisure: Flight Centre – Brand Strategy Brand strategy built to cut through travel noise and position FCB as the choice for travel. By making our brand as exciting as travel itself we dial up fun, experience and joy of travel whilst moving the brand from daggy to savvy. 30
Slide 31: Leisure: Early evidence supporting transformation
Leisure: Early evidence supporting transformation • Increase in positive customer metrics over COVID period • Desire to travel is high, and Flight Centre is the number 1 choice Customer and World Class Shop Demand Network • Americas / UK enquiry levels surge with changes in border restrictions • New
Slide 32: Leisure: Ignite – Pivot and Profitable
Leisure: Ignite – Pivot and Profitable 32
Slide 33: Leisure: Australia market-share
Leisure: Australia market-share Leisure Online Travel Intermediaries • Our share of the online travel intermediary channel increased to 25% +8% • This includes our International OTA brands BYOjet and Aunt Betty which are current selling near zero due to travel restrictions Leisure Offline Travel Int
Slide 34: Leisure: USA & RSA momentum
Leisure: USA & RSA momentum USA RSA • Strong productivity gains - capturing 45% of pre- • As borders/ countries open up, the leisure COVID TTV at 31 July 2021 with circa 16% of booking uptake is immediate traditional Liberty sales force • Focus on providing breaking travel news and a • New hybrid Li
Slide 35: Leisure: Trading
Leisure: Trading Australian lockdowns and state border restrictions Travel recovery in ANZ and Americas Australian state border re-openings VIC, Australia lockdown VIC, Australia lockdown 35
Slide 36: A global winning portfolio – Related diversity
A global winning portfolio – Related diversity B2B Home of the Travel Entrepreneur The most distinctive Complementary yet The go-to multi-channel premium/ luxury boutique The leading network and independent travel brands mass travel retailer with travel brand in market product proposition for accele
Slide 37: Core Business Platform
Core Business Platform BRANDS & CUSTOMER Flight Centre is the go to multi channel retailer Travel Associates and our premium travel with irresistible deals and savvy personal service advisers famous for providing 7 star service Two key brands and Customer accessible to our travellers however, wherev
Slide 38: Operating Strategy – 4 Models
Operating Strategy – 4 Models Network of World-Class World-Class Sales Self Service / Independent Contractor Shops Centre e-Commerce ➢ Right network – size and ➢ A scalable service, that ➢ Career path and flexibility ➢ Improved travel content spread enables customers 24/7 model for our people availa
Slide 39: New growth models
New growth models eCommerce A key change to our leisure business will be the transformation of our growth model. Growth Previously based on advertising, growing shop and consultant numbers, but the ROI of this model has steadily declined. The new growth model will align to changing customer #HOTTE t
Slide 40: Global leisure model TTV shift – FY19 to FY24
Global leisure model TTV shift – FY19 to FY24 Note: Complementary includes GOGO and Ignite and excludes Travel Money. 40
Slide 41: Digitising P-P Travel Retailing
Digitising P-P Travel Retailing • Trips platform creating a digital interface for a customer and Digital access to your agent consultant to build travel itineraries and ongoing communications and yourShop World Class travel options pre Network forum pre and during journey and during trip • Collabora
Slide 42: Trips – Global rollouts by brand
Trips – Global rollouts by brand 42
Slide 43: HOTTE portal
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Slide 44: Partnership Overview
Partnership Overview Amazon and StudentUniverse have joined forces with the goal of leveraging the ”Off to College” (OTC) experience. Together we will reach incoming freshmen, returning students, and existing Prime Student and StudentUniverse members this fall across all relevant channels to bring m
Slide 45: Jetmax and Google Flights
Jetmax and Google Flights Aunt Betty is now live on Google Flights UK, AU and NZ 45
Slide 46: FY21: Other businesses
FY21: Other businesses In-Destination Pedal Group Avmin The Travel Junction ➔ Discova destination management ➔ Continuing to trade strongly (see ➔ Aircraft charter business ➔ Externally-focused bedbank start- company (DMC) in hibernation in Slide 47) delivering strong results up already breaking eve
Slide 47: FY21: Pedal Group
FY21: Pedal Group Highlights • 99 Bikes (retail network) + ATA (wholesaler) • $54m profit before tax for FY21, up from $18m during FY20 • Group sales increased to $333m (FY20: $200m) • Large focus on e-bikes – popular, big-ticket items • NZ expansion – 6 shops + 2 more set to open (Auckland, Rotorua
Slide 48: CEO / MD Graham Turner
CEO / MD Graham Turner 48
Slide 49: FY22: Outlook
FY22: Outlook Market Guidance • Targeting a return to monthly profitability in both corporate & leisure during FY22 • Requires circa 50% of historic TTV in corporate, circa 40% in leisure • As flagged previously, timing remains heavily reliant on government policies – Australian domestic borders reo
Slide 50: FY22: Well placed for recovery
FY22: Well placed for recovery Expecting strong returns on pandemic-period investments in more favourable trading conditions • Now a leaner & more efficient business with stable cost base • Delivering consistent revenue growth, particularly during 2H-21, despite heavy government restrictions • Achie
Slide 51: FY22: Travel industry poised for rapid take-off
FY22: Travel industry poised for rapid take-off Trading conditions improving – vaccination programs gaining momentum globally Reaching advanced levels in key FLT markets, including UK, USA, Canada & France 51
Slide 52: FY22: Travel industry poised for rapid take-off
FY22: Travel industry poised for rapid take-off Trading conditions improving – restrictions being relaxed/removed • Various routes now open or opening outside Australia & New Zealand • USA-UK/Europe/Canada (all currently one-way “bubbles”), intra-Europe, Canada-UK (Sept 7), Germany/Brunei-Singapore
Slide 53: FY22: Travel industry poised for rapid take-off
FY22: Travel industry poised for rapid take-off Trading conditions improving – working hand in glove with suppliers • Maintaining strong relationships with global stable of air, hotel, car, tour & cruise partners • Relationships with key airline partners have helped many Australians stranded oversea
Slide 54: FY22: Travel industry poised for rapid take-off
FY22: Travel industry poised for rapid take-off Trading conditions improving – positive lead indicators The consumer … Confident: Consumer confidence globally has recovered rapidly (Source: OECD (2021), Consumer confidence index (CCI)) Cashed-up: $US5.4trillion in excess savings have been banked dur
Slide 55: FY22: Pent-up leisure demand
FY22: Pent-up leisure demand The Question: Once the pandemic is contained and international borders are open, how long would you likely take before travelling abroad? Key Findings The Answer 30 • Almost ¼ plan to take- off within 1 month 25 • About ½ plan to travel within 3 months 20 • Almost 2/3 sa
Slide 56: FY22: Travel industry poised for rapid take-off
FY22: Travel industry poised for rapid take-off Trading conditions improving – extra help required in a more complex travel world Passports & Paperwork Travel will be more complex in the post COVID world Added complexity plays to FLT’s strengths – reinforces value of leisure agents & corporate trave
Slide 57: Appendices
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Slide 58: Appendix 1: Segment results (business)
Appendix 1: Segment results (business) $m LEISURE CORPORATE OTHER FY21 FY20 FY21 FY20 FY21 FY20 TTV 1,391 7,422 2,169 6,911 385 970 Revenue 156 1,126 217 727 23 45 PBT (462) (762) (141) (14) 1 (73) PBT (underlying) (366) (528) (122) 72 (19) (53) Margins Revenue margin 11% 15% 10% 11% 6% 5% PBT margi
Slide 59: Appendix 2: Segment results (geographic)
Appendix 2: Segment results (geographic) $m ANZ AMERICAS EMEA ASIA OTHER FY21 FY20 FY21 FY20 FY21 FY20 FY21 FY20 FY21 FY20 TTV 2,067 7,344 803 3,646 568 2,455 473 1,667 34 191 Revenue 177 870 111 446 79 332 15 67 14 182 PBT (250) (421) (152) (102) (71) (69) (24) (17) (105) (240) PBT (underlying) (20
Slide 60: Appendix 3: Global TTV (Gross - July 21)
Appendix 3: Global TTV (Gross - July 21) Tracking at 26% of pre-COVID global gross TTV – Corporate 41% and Leisure 16% Canada Corporate 27% Europe Leisure 10% Corporate 39% UK UAE Corporate 27% Corporate 39% United States Leisure 7% Corporate 37% China Leisure 45% Corporate 52% Mexico SE Asia Corpor
Slide 61: Appendix 4: Results summary
Appendix 4: Results summary 5-YEAR SUMMARY FY21 FY20 FY19 FY18 FY17 TTV $3,945m $15,303m $23,728m $21,818m $20,109m Income margin 10.3% 12.4% 12.9% 13.4% 13.8% PBT $(601.7)m $(848.6)m $343.5m $364.3m $325.4m PBT (underlying) $(507.1)m $(509.2)m $343.1m $384.7m $329.5m NPAT $(433.5)m $(662.2)m $264.2
Flight Centre Travel Group — FY2021 Earnings Presentation on 6ix