Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — H1 FY2018 Earnings Presentation
42 slides from Flight Centre Travel's earnings presentation, Feb 22, 2018
Slide 1: FY18 1H Results
For personal use only FY18 1H RESULTS Flight Centre Travel Group ASX:FLT | February 22, 2018
Slide 2: Agenda
AGENDA For personal use only Highlights and Result Overview Adam Campbell, CFO Segment Results Graham “Skroo” Turner, CEO Business Transformation Melanie Waters-Ryan, COO Outlook Graham “Skroo” Turner, CEO
Slide 3: 1H Overview: Headline Results
1H Overview: Headline Results For personal use only Record 1H TTV • $814m increase on PCP to $10.16b • 8.7% above record FY17 result (up 9.3% in constant currency) Margin • Solid net margin improvement (up 20bps) to more than offset revenue margin dip • Lower revenue margin largely reflects “mix” ch
Slide 4: 1H Overview: Key Drivers
1H Overview: Key Drivers For personal use only Efficiency & Productivity • Solid TTV growth achieved during period of network consolidation • Further productivity gains – TTV per person up 7% Executing Transformation Strategies • Progressing towards 7-2-100 targets • Growing TTV, improving net margi
Slide 5: Highlights: Successfully Executing Key Strategies
Highlights: Successfully Executing Key Strategies For personal use only Early Progress Towards Transformation Targets 7 2 100 7% per annum TTV growth on average in Return to 2% full year net margin within 3 to 5 <$100m in cost growth during FY18 constant currency years (subject to mix) $33m* 1H incr
Slide 6: Results in Detail: P&L
Results in Detail: P&L Profit & Loss AUD $'m 1H FY18 1H FY17 Mvmt % For personal use only Group TTV 10,157 9,343 9% • 1H TTV topped $10b for 1st time. More than doubled over past 8 years (Appendix 1) Operating revenue 1,360 1,289 6% • Almost 30% of 1H TTV from lower income margin OTA, multi-national
Slide 7: Results in Detail: Balance Sheet
Balance Sheet Results in Detail: Balance Sheet AUD $'m As at Dec-17 As at Dec-16 Mvmt % For personal use only Cash & cash equivalents 1,011 1,010 0% Financial assets 203 197 3% Trade & other receivables 729 670 9% Other current assets 100 94 6% • Strong cash position – circa $1.2billion in cash & in
Slide 8: Results in Detail: Cash Flow
Cash flow statement Results in Detail: Cash Flow AUD $'m Operating activities 1H FY18 1H FY17 Mvmt % For personal use only Operating activities before interest and tax (51) (83) (39%) Net interest and tax paid (52) (63) (19%) Cash flow from operating activities (103) (147) (30%) • Operating cash out
Slide 9: Segmented Results
Segmented Results For personal use only Three Core Pillars in Five Key Geographies Leisure TEN AU/NZ EMEA Asia Americas Global (TEN) Corporate
Slide 10: Key Achievements: Leisure
Key Achievements: Leisure For personal use only Leisure businesses the initial Profit improvement – stronger North America turnaround focus of FLT’s transformation contribution to 1H group underway – significant reduction activities – Asia, Americas & earnings in 1H losses now Australia Investment i
Slide 11: Australian Leisure Transformation: Super Networks
Australian Leisure Transformation: Super Networks For personal use only Mass Market Premium Youth Focused Stronger Bigger Growing our profile and our business With the best and most marketed Becoming an even bigger force on the by focusing on our most famous product and our specialist expertise all
Slide 12: Key Achievements: Corporate
Key Achievements: Corporate For personal use only Now a Top-5 global TMC & Strong contribution to group Developing global footprint – winning market-share – 19% 1H results – generated 37% of 1H integrating recent acquisitions, TTV increase (up circa $600m TTV (FY17 1H: 34%) FCM Germany launched on P
Slide 13: World Class Corporate Technology Suite: FCM Connect
World Class Corporate Technology Suite FCM Connect For personal use only • Global launch during 1H • New name & positioning for FCM’s leading tech suite • Single access point for traveller, booker, manager
Slide 14: World Class Corporate Technology Suite: Sam
World Class Corporate Technology Suite Sam :] For personal use only • Corporate travel chat bot • Blends AI with the expertise of FCM consultants • Delivers personalised relevant info • Launched in USA. Now in Europe • Australia, Asia & Africa releases planned for 2H • Leading tech and differentiato
Slide 15: Key Achievements: Travel Experience Network
Key Achievements: Travel Experience Network For personal use only Investment in TEN Delivering Benefits That Are Tour Topdeck (18-30s) Aligned to FLT’s Strategic Objectives Operators Back-Roads (Small group/special interest) Greater control over customer offering Ability to create unique products De
Slide 16: Segmented Results: Highlights
Segmented Results: Highlights For personal use only Record contribution Record profit in UK, from overseas Strong Record TTV in all USA, Canada, South businesses - $38.2m turnaround in Canada – countries Africa, UAE, Mexico, profit (3 x FY17 1H $6.7m 1H PBT China, Malaysia contribution) Inaugural US
Slide 17: Segmented Results: Australia / New Zealand
Segmented Results: Australia / New Zealand For personal use only AUD $m 1H FY18 1H FY17 Mvmt Result Overview & Key Drivers TTV 5,895 5,653 4% • TTV up 4%, despite system change disruption & temporary sales force External Revenue 771 760 2% contraction(expected) Costs (667) (661) 1% • Modest profit g
Slide 18: Segmented Results: Americas
Segmented Results: Americas For personal use only Result Overview & Key Drivers AUD $m 1H FY18 1H FY17 Mvmt • 1H TTV topped $2billion for 1st time TTV 2,089 1,931 8% • Generated circa 20% of group TTV External Revenue 248 232 7% Share of Associate (1) - (100%) • Inaugural US 1H profit achieved Costs
Slide 19: Segmented Results: EMEA
Segmented Results: EMEA For personal use only Result Overview & Key Drivers AUD $m 1H FY18 1H FY17 Mvmt • Strong TTV & profit growth (up 37%) TTV 1,421 1,222 16% • Region generated circa 14% of group TTV & about 25% of group PBT External Revenue 196 178 11% • Profits underpinned by strong UK, UAE &
Slide 20: Segmented Results: Asia
Segmented Results: Asia For personal use only AUD $m 1H FY18 1H FY17 Mvmt Result Overview & Key Drivers TTV 637 439 45% • Strong TTV growth from emerging region which includes Singapore, Malaysia, India, Mainland China & Hong Kong External Revenue 43 36 20% Costs (42) (39) 6% • Return to profit afte
Slide 21: Segmented Results: Other
Segmented Results: Other For personal use only Result Overview & Key Drivers AUD $m 1H FY18 1H FY17 Mvmt • Items that are not allocated to geographical segments, including TTV 115 99 17% FLT’s TEN businesses External Revenue 115 99 17% Share of JV 2 1 54% • TTV & revenue growth mainly driven by incl
Slide 22: FY18 Results: Emerging Brand Success Stories
FY18 Results: Emerging Brand Success Stories For personal use only Travel Money BYOjet + Aunt Betty Pedal Group (JV) Avmin Circa $670m in 1H TTV, up 18% Almost $180m in 1H TTV Includes retailer 99 Bikes & Aircraft charter business growing wholesaler Advance Traders strongly Now FLT’s 4th largest bra
Slide 23: Transformation Update: Priorities
Transformation Update: Priorities For personal use only Digital Commerce Growth Controlling Costs & Improving Efficiency • Growing online completion (e-commerce) & online origination as part of • Leaner support structures, leading to lower costs blended offering • Network planning to secure optimal
Slide 24: Digital Transformation
Digital Transformation Improving our services For personal use only Changing from a position of strength. • Making digital integral to our strategy • Building new websites, mobile apps and platforms • Reaching more customers across more channels • Increasing profitability by improving scalability •
Slide 25: Digital Transformation: Online Completion
Digital Transformation • Online Completion Global platform development and rollout on track For personal use only • UK and RSA live with new e-commerce solutions • Major new UX/UI releases to all properties • New native app releases driving continued growth and Leisure e-commerce sales growing repea
Slide 26: Digital Transformation: Digital in All Channels
Digital Transformation Digital in All Channels For personal use only Phone calls Lead Gen Chats Appointments Emails Shop visits Web + App • New lead management technology live • Digital Factory (dNA) driving change in digital • Culture of testing and conversion rate optimisation • Consolidation of s
Slide 27: Transformation Update: Efficiency & Costs
Transformation Update: Efficiency & Costs For personal use only Strengthening Platforms & Improving Lowering Overhead / Support Costs Network Efficiency New in-store POS systems now fully Redundancies late in FY17 (Asia, some deployed (2.5-year project) Australia-based global roles) Microsoft Dynami
Slide 28: Transformation Update: Growth Brands & Models
Transformation Update: Growth Brands & Models For personal use only Leisure Corporate • Initial focus on loss-making North America, UAE & Asia operations • Investment in FCM network - 8 new countries during FY17 & 12 in • Canada & US leisure network consolidation to improve past 3 years - & leading
Slide 29: Australian Super Networks: Overview
Australian Super Networks: Overview For personal use only Joining Forces to Create 3 Leisure Travel Super Networks • Merging some Australian leisure brands to create larger & individually more successful businesses • Smaller scale project also underway in NZ Key Aspects • Escape Travel & Cruiseabout
Slide 30: Super Networks: A Market-Share Growth Plan
For personal use only Super Networks: A Market-Share Growth Plan No Travel Consultant Roles Lost No Negative Impact on Customer or Suppliers No TTV Lost Staff/teams affected by brand mergers Comprehensive communications plan in Overall sales force to be maintained will be redeployed to either Flight
Slide 31: Investing In Our People
Investing In Our People For personal use only New Initiatives • Paid Maternity Leave (July 18) • Workplace Flexibility • Mentor Program • Professional Development Training • UK Apprenticeship Program • Diversity Project
Slide 32: FY18 Outlook: Guidance Updated
FY18 Outlook: Guidance Updated For personal use only Trading slightly above guidance Now targeting $360m-$385m New guidance range represents after 1H –leading to modest upgrade underlying PBT 9.3%-16.8% growth on FY17 to full year target (previously $350m-$380m) 1H profit growth trajectory unlikely
Slide 33: Outlook: 2H
Overseas Businesses Outlook: 2H For personal use only • Further growth expected after record-breaking 1H • Americas: Leisure businesses approaching break-even over full year, gaining Growth • corporate market-share EMEA: UK business continuing to perform well & driving strong EMEA results Drivers Au
Slide 34: FY18 Outlook: Continued Network Improvement
FY18 Outlook: Continued Network Improvement For personal use only Minimal Network Planning M&A activity - Ongoing productivity integration focus focus • Right shops in right locations • Moving poorly Flagship & Growth in located shops specialist lower cost growth for channels & • Closer relationship
Slide 35: End of Presentation: Questions?
For personal use only End of Presentation Questions? 35
Slide 36: Appendix 1: TTV Growth Throughout The Cycle
Appendix 1: TTV Growth Throughout The Cycle For personal use only TTV ($b) $12.00 $10.00 $8.00 $6.00 TTV ($b) $4.00 $2.00 $0.00 Dec 31 2009 Dec 31 2010 Dec 31 2011 Dec 31 2012 Dec 31 2013 Dec 31 2014 Dec 31 2015 Dec 31 2016 Dec 31 2017 1H TTV Has Now More Than Doubled in Eight Years 36
Slide 37: Appendix 2: Summary - Recent Acquisitions
Appendix 2: Summary - Recent Acquisitions Strategic Rational Date Completed Segment Ownership For personal use only Leisure 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 Chin
Slide 38: Appendix 3: Changing Cap-Ex Profile
Appendix 3: Changing Cap-Ex Profile For personal use only FLT capex spend $m 70 IT / Other Projects 60 Head Office 17 50 17 Shop 40 Cap-ex moderating & shifting 22 8 9 2 towards system & IT spend – 30 31 now about half of total budget 2 20 33 30 (FY15: Circa 25%) 10 20 15 - H1'18 H1'17 H1'16 H1'15 3
Slide 39: Appendix 4: Results by Country
Appendix 4: Results by Country United Kingdom Rest of Europe1 India Greater China For personal use only Canada TTV: $1.0b, up 8% in AUD TTV: $134m, up 289% TTV: $367m, up 79% TTV: $142m, up 4% in (up 8% in lc) in AUD in AUD (up 77% in lc) AUD TTV: $0.7b, up 15% in AUD AUD EBIT: $25.4m AUD EBIT: ($0.
Slide 40: Appendix 5: Capacity Growth Slowing in Australia
Appendix 5: Capacity Growth Slowing in Australia Seats available on international scheduled flights to & from Australia For personal use only 12 10 8 Percentage growth % 6 2016 2017 4 2 0 JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER Months 40 Source: BITRE
Slide 41: Appendix 6: Historical Results year summary
Appendix 6: Historical Results 5 year summary For personal use only December December December December December 2017 2016 2015 2014 2013 TTV $10,157m $9,343m $9,182m $8,138m $7,480m Income margin 13.5% 14.0% 13.7% 13.6% 14.1% EBITDA $177.4m $143.8m $188.0m $164.0m $179.3m PBT $139.4m $109.2m $156.9
Slide 42: Appendix 7: Net Margin Seasonality
Appendix 7: Net Margin Seasonality For personal use only 3.00% Positive 1H net margin trend during FY18 Net margin typically increases during 2H Improvement reflects: 2.50% • North American leisure seasonality – businesses become profitable after loss-making 1H 2.00% • Relatively high fixed costs –
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