Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — FY2017 Earnings Presentation
40 slides from Flight Centre Travel's earnings presentation, Aug 24, 2017
Slide 1: FY17 Results
For personal use only FY17 Results AUGUST 24, 2017
Slide 2: Today's Agenda
Today’s Agenda For personal use only The FLT Story • Graham Turner (CEO) FY17 Financial Results • Adam Campbell (CFO) Strategy & Business Transformation • Melanie Waters-Ryan (COO) FY18 Outlook • Graham Turner (CEO)
Slide 3: FLT Today
FLT Today Three Core Pillars in Five Key Geographies: For personal use only Leisure Australia/NZ TEN EMEA Asia Americas Global (in-destination) Corporate
Slide 4: Leisure Travel
Leisure Travel For personal use only CONTACT FLAGSHIP INDEPENDENT OTA COMMUNITY SPECIALIST EVENTS CENTRES STORES CONTRACTOR • High volume, • 24/7 sales, • Hyperstores • Smaller • Affiliates • FCBT • Travel Expos, simple Chat & assist • Super regionals shopping • Mobile agents • First & Business Disc
Slide 5: Corporate Travel
Corporate Travel • Continued Sales Growth: • Brand Diversity: Specialist For personal use only $6.6b in FY17 TTV, SME, TMS, MICE, education, consolidating FLT’s position entertainment businesses as one of the world’s largest travel managers • System Enhancements: Ongoing upgrades to leading technolo
Slide 6: Travel Experience Network
Travel Experience Network For personal use only Greater control over customer offering Tour Operators Ability to create unique products Distribution via FLT shop & corporate business network Destination Margin – vertical integration Hotel Management Management Companies New external revenue streams
Slide 7: FY17: A Snapshot
FY17: A Snapshot For personal use only Key Targets Achieved Highlights Lowlights • $20b + TTV • Record global sales • Airfare deflation • $1b+ in online leisure • Accelerated 2H growth • Lower cost growth, but TTV • Balance sheet strength increase outpaced • PBT within targeted • Acquisitions in key
Slide 8: Financial Results: Profit & Loss
Financial Results Profit & Loss • Achieved $20b+ TTV target For personal use only PCP Mov't AUD $m FY17 FY16 % • 21st year of growth in 22 years since listing Group TTV 20,109 19,305 4% • Reasonable cost control in low revenue growth Operating revenue 2,647 2,612 1% trading cycle Other revenue 30 30
Slide 9: Underlying Half Year Comparison
Financial Results Underlying Half Year Comparison For personal use only 1H 1H PCP Mov't 2H 2H PCP Mov't Full Year Full Year PCP Mov't AUD $m Dec-16 Dec-15 % Jun-17 Jun-16 % 2017 2016 % Group TTV 9,343 9,182 1.8% 10,766 10,123 6.4% 20,109 19,305 4.2% Revenue 1,251 1,247 0.3% 1,426 1,384 3.1% 2,677 2,
Slide 10: Underlying TTV Growth
Financial Results For personal use only Underlying TTV Growth (constant currency) Leisure Corporate Total PCP Mov't PCP Mov't PCP Mov't % % % Australia & New Zealand 5.8% 3.8% 5.4% Americas 9.1% 5.4% 5.6% EMEA 8.9% 16.8% 11.7% Asia 81.6% 18.2% 25.3% Other n/a n/a 1.0% Total 7.4% 8.7% 7.1% • $804m ye
Slide 11: Sales Growth Outpacing Industry Growth
Sales Growth Outpacing Industry Growth FY17 Growth (%) For personal use only 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Australian Outbound Departures FLT Australian Leisure TTV FLT International Tickets (ex Australia)
Slide 12: Productivity Gains
Productivity Gains Productivity Growth in Local Currency For personal use only PCP Driving Productivity Growth Mov't in thousands FY17 FY16 % • Tech & system changes India INR 24,904 17,966 38.6% • The right product & margin China CNY 6,299 5,295 19.0% • Person-to-person Hong Kong HKD 5,534 5,448 1.
Slide 13: Strategic Acquisitions
Strategic Acquisitions Strategic Rational Date Completed Segment Ownership Leisure For personal use only Ignite Voucher-based model selling unique product offers direct & via shop Sep-16 Aust & NZ 49% network Sunny Provides FCTG the required licence to sell outbound travel to Chinese Oct-16 Asia 100
Slide 14: FY17: Challenges
FY17: Challenges Airfare Deflation For personal use only • Impacted top & bottom-line results Cost Growth • Modest cost increase during FY17 but growth exceeded revenue growth in low-fare environment • Cost increases inevitable, but strategies in place to slow future growth FX Adversely Affected Res
Slide 15: Australia/NZ Result Overview
Financial Results For personal use only Australia/NZ Result Overview Australia & New Zealand Segment • Record TTV in both countries but profits down 7% PCP Mov't AUD $m FY17 FY16 % • Corporate growth in relatively flat market – driven TTV 11,707 11,080 6% largely by account wins, successful focus on
Slide 16: EMEA Results Overview
Financial Results For personal use only EMEA Results Overview EMEA Segment • Region generated circa 20% of group profit & PCP Mov't AUD $m FY17 FY16 % record sales (up 12% in LC) but translation heavily TTV 2,682 2,760 (3% ) impacted by FX External Revenue 358 386 (7% ) • Strong UK results in LC PBT
Slide 17: Americas Result Overview
Financial Results For personal use only Americas Result Overview Americas Segment • Region generated circa 10% of group profit PCP Mov't AUD $m FY17 FY16 % • Record profit & sales contribution underpinned by TTV 4,304 4,227 2% strong corporate results, StudentUniverse & slight External Revenue 503 4
Slide 18: Asia Result Overview
Financial Results For personal use only Asia Result Overview Asia Segment • Solid TTV growth – topped $1b for 1st time - but PCP Mov't AUD $m FY17 FY16 % small overall loss TTV 1,061 881 20% • Good Mainland China results offset by modest External Revenue 78 75 5% losses in Hong Kong , Singapore (now
Slide 19: Other Segment Result Overview
Financial Results For personal use only Result Overview Other Segment • Includes FLT’s global businesses (TEN + others) PCP Mov't AUD $m FY17 FY16 % • TTV decrease largely due to FX TTV 355 358 (1% ) • Solid contribution from Buffalo Tours DMC (now External Revenue Underlying External Revenue 266 25
Slide 20: Financial Results Balance Sheet
Financial Results Balance Sheet 30-Jun 30-Jun PCP Mov't AUD $m 2017 2016 % • Trade receivables increase due to turnover growth Assets For personal use only & new corporate client wins on account Cash & cash equivalents 1,282 1,316 (3%) Trade & other receivables 762 672 13% • Financial assets include
Slide 21: Cash Flow Statement
Financial Results Cash Flow Statement • $295m operating cash inflow recorded For personal use only AUD $m FY17 FY16 • Year-on-year movement driven by timing of airline Operating activities payment cycle (BSP) & increased corporate travel Operating activities before interest and tax 399 467 Net inter
Slide 22: Business Transformation
Business Transformation For personal use only Focus on Core Program Launched 3-5 Year Timeline Businesses & March 2017 Vertical Integration Team of Senior TTV Growth & Cost Executives, Medium-Term Goals in Efficiencies Backed by External Place Resources When Required
Slide 23: Transformation Targets – Profitable, Scalable Growth
Transformation Targets – Profitable, Scalable Growth For personal use only TTV Growth • Targeting 7% per annum growth on average in constant currency • Equals $4.5b TTV growth over next 3 years Efficiency • Every business & brand in every geography in material profit • All current loss-making busine
Slide 24: Key Initiatives
Key Initiatives For personal use only • Digital Commerce • Globalisation – Air, Land Growth & IT • Investment in Growth • Controlling Costs & Brands & Business Improving Efficiency Models in Leisure, Corporate & Travel Experience Network
Slide 25: Digital Commerce
Digital Commerce For personal use only Online Completion $1B DIGITAL COMMERCE Online Origination * $4B+ Platforms & Online Tech Completion Digital Commerce Team 300+ Online Origination Countries Served 10+
Slide 26: Record Online Leisure Sales
Record Online Leisure Sales $1b+ in TTV During FY17 For personal use only Student Universe flightcentre.com.au BYOjet & Aunt Betty Other Targeting an additional 30% TTV growth during FY18
Slide 27: Progress Update
Progress Update For personal use only Multiproduct Platform Best Practice Sharing Investing in scalable travel tech Internal consulting and synergies Conversion Rate Optimization Enquiry Management Tech Testing, UX/UI, rebuilding Matching, tracking, converting Mobile Services Surfacing Unique Conten
Slide 28: Building for Scale
Building for Scale For personal use only Platform Flight Centre Escape Travel Student Flights OTHER ... CUSTOM FEATURES PLATFORM FEATURES Leverage work on one platform across multiple brands Set up FLT for shared services with worldwide contribution Improve our speed to market across portfolio
Slide 29: Growth Brands & Models
Growth Brands & Models For personal use only Rigorous market & Underperforming Ensuring every brand in business model business models to every geography is analysis of every pivot within 3 years or materially profitable business in every be divested/closed geography Further investment in Investment
Slide 30: Globalisation
Globalisation For personal use only Air • New air revenue streams & business models • Centralised ticketing structure on the way (currently regionalised) Land • Global DMC, touring & hotel networks now being created • Enhancing global procurement & distribution networks – wholesale & external B2B sa
Slide 31: Cost Reduction Strategies
Cost Reduction Strategies For personal use only Stronger Network Staffing Real Estate Cap-ex Returns • Globalisation, off- • Better utilisation & • Spending starting • Focus on core shoring & out- leasing to decrease, sectors sourcing efficiencies which will lead to • Removal of loss- • System • Slo
Slide 32: Progress Update: Growth and Costs
Progress Update • Modest FY17 growth – well below historic • Investment in low-cost & scalable leisure models, For personal use only Growth Costs averages ($150m per year between FY07 & including Independent Contractor model in FY16, $655m increase in 3 years between Australia & NZ FY13 & FY16) • On
Slide 33: Voucher Based Unique Product Model – Get Luxe
Voucher Based Unique Product Model – Get Luxe For personal use only
Slide 34: Independent Contractor/Home-Based Model
Independent Contractor/Home-Based Model For personal use only Access to new talent Strong growth sector Lower cost model pool of highly globally experienced agents Greater flexibility & new New distribution Added convenience & career opportunities for channels for FLT's choice for customers FLT staf
Slide 35: FY18 Outlook
FY18 Outlook For personal use only Income Margin: Growth in Growth Expected: lower margin sectors Positive Momentum: Targeting continued sales (online, multi-national Stronger 2H results growth & return to profit corporate, FX) likely to achieved after tough 1H growth drive modest short-term decline
Slide 36: Outlook: Network Growth
Outlook: Network Growth • Modest expansion globally • Some businesses being For personal use only during FY17 – 1.8% increase pivoted or downsized (Asia & in sales teams, circa 1% Americas), some shops being increase in sales consultants closed & teams relocated to better sites • Primary focus on ne
Slide 37: End of Presentation – Questions?
End of For personal use only Presentation Questions?
Slide 38: Appendix 1: Results By Country
Appendix 1: Results By Country Europe For personal use only Greater China Canada TTV: $170m, up 170% in AUD TTV: $281m, up 5% TTV: $1.2b, up 1% in AUD EBIT: ($1.9m) in AUD (up 8% in lc) AUD (up 4% in lc) BUSINESSES: 20 India AUD EBIT: $0.0m AUD EBIT: $7.6m BUSINESSES: 42 BUSINESSES: 223 TTV: $571m,
Slide 39: Appendix 2: Historical Results Year Summary
Appendix 2: Historical Results 5 Year Summary For personal use only 30-Jun 30-Jun 30-Jun 30-Jun 30-Jun AUD $m FY17 FY16 FY15 FY14 FY13 TTV $ 20,109 m $ 19,305 m $ 17,598 m $ 16,049 m $ 14,259 m Income margin 13.3% 13.7% 13.6% 14.0% 13.9% EBITDA $ 402.1 m $ 413.9 m $ 417.0 m $ 378.4 m $ 395.2 m PBT (
Slide 40: Appendix 3: Breaking News
Appendix 3: Breaking News … New Marketing Initiatives 48 Hour Destination – New Travel Show For personal use only 13-part travel show, featuring Flight Centre consultant Greer Gardiner First episode airs Sunday (August 27) on Channel 10 High profile new ad or tenplay.com.au campaign now underway.
Flight Centre Travel Group — FY2017 Earnings Presentation on 6ix