Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — FY2018 Earnings Presentation
52 slides from Flight Centre Travel's earnings presentation, Aug 23, 2018
Slide 1: FY18 Full Year Result
FY18 FULL YEAR RESULT Flight Centre Travel Group ASX:FLT | August 23, 2018
Slide 2: Agenda
AGENDA Results & Highlights Transformation Outlook Adam Melanie Graham Campbell Waters-Ryan “Skroo” Turner CFO COO CEO
Slide 3: Results & Highlights: New Milestones Established
Results & Highlights: New Milestones Established Record TTV of Up 8.5% & $1.7b higher than previous record (FY17) $21.8b Represents almost $60m in TTV on average every day Record Profit Near top of upgraded guidance & $55m above FY17 result $384.7m (underlying) 16.8% year-on-year growth & 2% above p
Slide 4: Results & Highlights: Key Drivers
Results & Highlights: Key Drivers Successfully Executing BT Strategies Dealing with Loss-making businesses removed, downsized or pivoted problem areas USA & Canada leisure profits for 1st time since FY12 & FY11 respectively Globalisation Profit growth driven by overseas businesses – particularly EME
Slide 5: Results & Highlights: Successfully Executing Key Strategies
Results & Highlights: Successfully Executing Key Strategies Early Progress Towards Transformation Targets 7 2 100 Goal: Goal: Goal: 7% per annum TTV growth on average in Return to 2% full year net margin by FY22 <$100m in underlying* cost growth during constant currency through to FY22 (subject to m
Slide 6: Results & Highlights: Key Drivers - Margins
Results & Highlights: Key Drivers - Margins Income 25bps decrease – decrease was expected & driven largely by ongoing business mix changes Margin Reflects rapid growth in lower revenue margin businesses – multi-national corporate (FCM), FX (Travel Money), leisure OTAs Cost Margin 50bps improvement t
Slide 7: Results & Highlights: Geographic Diversity
Results & Highlights: Geographic Diversity 49% of TTV Generated Offshore Record TTV achieved in all geographical segments & in all countries
Slide 8: Results & Highlights: Geographic Diversity
Results & Highlights: Geographic Diversity New Record Profits EMEA & Americas Driving Profit Growth USA Canada $151m FY18 Profit Contribution Mexico 200 United Kingdom (UK) 150 South Africa (RSA) EMEA & Americas United Arab Emirates (UAE) 100 Profit Contribution Netherlands ($m) 50 S
Slide 9: Results & Highlights: Building For The Future
Results & Highlights: Building For The Future New in-store Rebrand & Grow FCM technology Hotel management systems (GDS) R&G) plan suite consolidated business acquired now fully deployed completed in & relaunched as (BHMA), Americas- after Australia & NZ Australia – 1200 FCM Connect based DMC
Slide 10: FY18 Results: P&L
Profit & Loss AUD $'m FY18 FY17 Mvmt % FY18 Results: P&L Group TTV 21,826 20,109 9% Record TTV achieved – overall & in all countries Operating revenue 2,921 2,740 7% Other revenue 29 30 (5%) Record revenue but at a lower growth rate (as expected) – leading to 25bps income Total revenue 2,950 2,7
Slide 11: FY18 Results: Balance Sheet
Balance Sheet As at As at FY18 Results: Balance Sheet AUD $'m Cash & cash equivalents June-18 1,273 June-17 1,282 Mvmt % (1%) Financial assets 204 200 2% Trade & other receivables 845 762 11% Other current assets 113 94 20% Strong cash position – circa $1.5 billion in cash & investments at June 30
Slide 12: FY18 Results: Cash Flow
Cash flow statement FY18 Results: Cash Flow AUD $'m Operating activities FY18 FY17 Mvmt % Operating activities before interest and tax 404 399 1% Net interest and tax paid (90) (103) (13%) $314m operating cash inflow over full year Cash flow from operating activities 314 295 6% Lower tax paid in
Slide 13: Results & Highlights: Core Pillars, Geographies
Results & Highlights: 3 Core Pillars, 5 Geographies Leisure TEN AU/NZ EMEA Asia Americas Global (TEN) Corporate
Slide 14: Results & Highlights: Leisure
Results & Highlights: Leisure Maintained TTV during period of Strong North America Transformation focus – Asia, consolidation - brands turnaround – Canada & US UAE, Americas & Australia removed/merged, costs reduced businesses broke even Investment in new models – R&G plan initiated in Australia to
Slide 15: Results & Highlights: Corporate
Results & Highlights: Corporate Winning market-share – Truly global - now a top-5 global Strong contribution to group 16% increase in FY18 TTV TMC with company-owned results – generated 35% of (48% growth achieved since business in 23 countries & FY18 TTV ($7.7b) FY15) licensees in 71 more Leading C
Slide 16: Your CT: New Portal for SME customers
Your CT: New Portal for SME customers PROFILE APPROVE & MANAGEMENT REQUEST TRAVEL TRAVEL POLICY ALERTS BOOKING INVOICE DATA TRAVELLER REPORTS TRACKING
Slide 17: Results & Highlights: Travel Experiences Network
Results & Highlights: Travel Experiences Network Now includes tour operating Emerging business pillar & an businesses, destination Modest FY18 profit contribution important future growth driver management companies during period of investment (DMCs) & hotel management Olympus (Mexico) acquired as Fi
Slide 18: Results & Highlights: Australia/New Zealand
Results & Highlights: Australia/New Zealand AUD $m FY18 FY17 Mvmt % Result Overview & Key Drivers 4% TTV growth to $12.3b TTV 12,317 11,836 4% $250million underlying PBT achieved, down 4% in AUD External Revenue 1,616 1,604 1% Successfully slowing cost growth – up circa 2% Costs (1,374) (1,343
Slide 19: Results & Highlights: Americas
Results & Highlights: Americas Result Overview & Key Drivers AUD $m FY18 FY17 Mvmt % 10% TTV growth to just under $4.8b – about 22% of group TTV Strong profit growth – more than doubled to $70m TTV 4,755 4,330 10% $52m US profit – driven by continuing strong corporate results & leisure Externa
Slide 20: Results & Highlights: EMEA
Results & Highlights: EMEA AUD $m FY18 FY17 Mvmt % Result Overview & Key Drivers TTV 3,104 2,707 15% 15% TTV growth to $3.1b – region generated circa 14% of group TTV 30% PBT growth to $80million (21% of underlying group result) External Revenue 427 382 12% UK & Europe profit up 24% in AUD, de
Slide 21: Results & Highlights: Asia
Results & Highlights: Asia AUD $m FY18 FY17 Mvmt % Result Overview & Key Drivers Strong TTV growth – up 30% - from emerging region which includes Singapore, TTV 1,386 1,063 30% Malaysia, India, Mainland China & Hong Kong External Revenue 92 80 15% Circa $8m profit turnaround – $5.8m result achie
Slide 22: Results & Highlights: Other
Results & Highlights: Other AUD $m FY18 FY17 Mvmt % TTV 263 173 52% Result Overview & Key Drivers Segment includes TEN & other “global” businesses External Revenue 247 173 43% Underlying PBT in line with FY17 Share of JV 3 3 27% FY18 PBT includes $13m ACCC penalty, $4m Employment Office loss i
Slide 23: Business Transformation Program
Business Transformation Program Launched April 2017 Year 2 & 3 The “Clean-up” Investment & stage – businesses Business & brands Engineering across our 3 divisions Year 1
Slide 24: Business Transformation: FY18 Priorities
Business Transformation: FY18 Priorities Loss-making & Dealing with problem areas – removing or turning around loss Immaterial making businesses Businesses Costs & Improving cost margins (slowing overall cost growth) & Efficiency enhancing productivity Globalisation Air, land, digital & IT synergies
Slide 25: Business Transformation: FY18 – Loss Making Businesses
Business Transformation: FY18 – Loss Making Businesses Loss Focus on single core brand (FCM) in SE Asia Making & Loss-making UAE leisure business closed Immaterial Singapore & HK leisure businesses pivoted & downsized Businesses Loss-making North American leisure businesses repositioned & now breaki
Slide 26: Business Transformation: Rebrand & Grow
Business Transformation: Rebrand & Grow Mass Market Premium Youth Focus on our No.1 travel brand – Flight Growing a network of premium agents Smaller but better network of Student Centre dominating the flight, holiday, & businesses (including franchises) Flights shops & bringing cruise + small busin
Slide 27: Business Transformation: FY18 Achievements
Business Transformation: FY18 Achievements Further productivity growth – up 5% globally Costs & Efficiency Leaner support structures – some head office redundancies (FY17) Outsourcing & robotics – web support, some finance functions Manila call centre closed Sales & marketing restructure in Australi
Slide 28: Business Transformation: FY18 Achievements - Globalisation
Business Transformation: FY18 Achievements - Globalisation Decreasing Stronger contributions from overseas businesses reliance on Australia to drive Three main profit engines starting to emerge – Australia/NZ, Americas, EMEA overall growth Air, land & IT Global Ticket Centre established (regional mo
Slide 29: Business Transformation: Ongoing Digital Focus
Business Transformation: Ongoing Digital Focus Online Product New responsive air, hotel & cruise booking engines now live Pricing & Booking Packages coming soon Capability Self service or expert access throughout – supporting the blended model Lead Generation Automated/faster responses & follow-up –
Slide 30: Digital Transformation: RedConnect
LEAD MANAGEMENT Digital Transformation: RedConnect New lead management technology, exiting MVP Developed at the Digital Factory (dNA) in Boston Successful pilot with Liberty Travel in USA Flight Centre Canada going live next Integration of new appointment technology Data, insights to imp
Slide 31: Business Transformation: Updated Targets in Place
Business Transformation: Updated Targets in Place Unchanged New Target Unchanged 7 10 2 TTV Growth Cost Margin Net Margin 7% per annum TTV growth on average in 10% cost margin (underlying* costs as a 2% full year net margin by FY22 constant currency through to FY22 percentage of TTV) by FY22 (subjec
Slide 32: Business Transformation: FY19 Priorities
Business Transformation: FY19 Priorities New Focus Areas Business engineering in our core brands to create: 7 More efficient businesses A better & more consistent customer experience Scalable growth 10 Systematic Approach Market assessment & thorough research Application of brand DNA (see
Slide 33: Fresh Air (+Hotels, Cruise)
FRESH AIR (+HOTELS,CRUISE) New airfare services live New hotels online New native app features Modern mobile-first UX/UI New cruises online Focus on lead generation
Slide 34: Outlook: Trading Update
Solid Start to Tracking above prior corresponding period in early FY19 Outlook: New Year trading Trading Guidance to Too early to provide meaningful FY19 targets be Provided Update After Q1 In line with recent practice, will update the market at AGM (October) after Q1 Targeting Expecting to top reco
Slide 35: Outlook: Market Conditions
Ongoing Air travel expected to double between CY17 and CY36 (Source: market growth IATA) = 3.6% CAGR Outlook: expected Asia-Pacific region expected to be the key growth driver Market Airfare prices Average fares in line with FY17 in Australia remaining Conditions reasonably Modest increases or decre
Slide 36: Outlook: Growth Drivers
Positive Aiming to capture a greater share of a growing global travel market Outlook: Momentum in a Growth Market Growth BT Benefits Transformation program expected to deliver further cost, efficiency & revenue benefits during 2nd year Drivers Globalisation Continued strong contributions from overse
Slide 37: Outlook: Emerging Businesses
Outlook: ci events Travel Money Emerging Businesses Stage & Screen Jetmax Gaining Scale $31m FY18 FLT Asia Profit 99 Bikes Contribution Not expected to be major profit drivers in the near-term, but ongoing growth expected
Slide 38: Outlook: Leisure
Working towards 3 Scalable, profitable growth key strategic anchors Famous & distinctive brands Easy to buy from Outlook: Flight Centre brand Investment into our core leisure brand – productivity & conversion focuses evolution Leisure FCB 2.0 in Australia (transformation program) Stronger Premium Pr
Slide 39: New Initiatives: FC Exclusives
New Initiatives: FC Exclusives
Slide 40: Outlook: Corporate
Strong Record account wins during FY18 Outlook: Pipeline Circa $1b in new business won globally for FCM alone Corporate Truly Global Recent acquisitions now bedded down Further expansion into other key markets Tech Suite Mobile app, Sam :] Enhancements to Support Your CT People Savi Offerings
Slide 41: New Initiatives: Savi
- New Initiatives: Savi e Introducing the platform that = IMI will keep you one step ahead Now that's Savi. FLIGHT, ‘CENTRE TRAVEL GROUP’
Slide 42: Outlook: TEN
Building For A key longer term growth driver for FLT The Future Outlook: TEN Establishing the foundations Global DMC Further progress towards global DMC plan – new systems & Network branding Will consider further acquisition opportunities – Buffalo now 100% owned by FLT Global Set to carry more than
Slide 43: New Initiatives: BHMA
New Initiatives: BHMA Now operating 18 properties in Thailand (17) & Vietnam (1) 4 additional properties signed & due to open during FY19 in Thailand (2), Vietnam (1) and Bali (1) X2 & Away brands Targeting additional properties in destinations where FLT has strong market-share Bali, Phuke
Slide 44: Outlook: Investing in Our People
Outlook: Investing in Our People New Australian leisure wage model – currently working with our people to develop an Enterprise Bargaining Agreement Workplace Flexibility & Diversity Programs Paid Parental Leave in Australia Mentoring UK Apprenticeship Program FCM Leave
Slide 45: Beyond NDC
Beyond NDC Proactively working with GDSs & airlines on NDC (New Distribution Capability) initiatives Only Australasian-based TMC to be included as an initial launch partner in Sabre’s Beyond NDC Program Will take an active role in future developments Also taking an active role in Amadeus programs Ai
Slide 46: End of Presentation Questions?
End of Presentation Questions? 46
Slide 47: Appendix 1: Results by Country
Appendix 1: Results by Country United Kingdom Rest of Europe1 India Greater China Canada TTV: $2.1b, up 11% in TTV: $282m, up 55% in TTV: $805m, up 41% TTV: $304m, up 8% in AUD (up 7% in lc) AUD in AUD (up 43% in lc) AUD TTV: $1.5b, up 18% in AUD AUD EBIT: $55.4m AUD EBIT: ($0.1m) AUD EBIT: $2.1m AU
Slide 48: Appendix 2: Historical Results
Appendix 2: Historical Results 5 year summary June June June June June 2018 2017 2016 2015 2014 TTV $21,826m $20,109m $19,305m $17,598m $16,049m Income margin 13.5% 13.8% 13.7% 13.6% 14.0% EBITDA $441.5m $402.1m $413.9m $417.0m $378.4m PBT $363.5m $325.4m $345.0m $366.3m $323.8m PBT (underlying) $38
Slide 49: Brand Codes
INTERNATIONAL FLIGHTS HONG KONG LONDON LOS ANGELES MANILA NEW YORK PARIS PHUKET ROME SINGAPORE RETURN FROM. ota own ne eww A Am oO Sc FLIGHT, CENTRE TRAVEL GROUP’
Slide 50: Our DNA
OUR DNA ✓ FOR TRAVELERS, BY TRAVELERS ✓ IRRESISTIBLE DEALS ✓ SAVVY BUT FUN WITH IT ✓ PERSONAL ✓ MAKE IT EASY
Slide 51: Brand Codes: Travel Associates
BRAND CODES: Travel Associates
Slide 52: Our DNA: Travel Associates
OUR DNA: Travel Associates TAY © , @ Enduring personal Crafting authentic connections experiences Boutique business Discerning Trusted advisers thinking
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