Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — H1 FY2015 Earnings Presentation
54 slides from Flight Centre Travel's earnings presentation, Feb 24, 2015
Slide 1: 2015 First Half Results Presentation
For personal use only 2015 FIRST HALF RESULTS PRESENTATION 24 FEBRUARY 2015
Slide 2: Presentation Overview
PRESENTATION OVERVIEW For personal use only 1. Introduction - Haydn Long 2. The numbers - Andrew Flannery 3. The business - Graham Turner 4. The strategies - Melanie Waters-Ryan 5. The future - Graham Turner 6. Questions 7. Appendices
Slide 3: Introduction
INTRODUCTION For personal use only • First half result in line with revised guidance – Underpinned by record global sales and record offshore profits • Continuing to build for the future – Significant investment in sales network, product range and people • Balance sheet strengthened – Further cash g
Slide 4: The Numbers
For personal use only THE NUMBERS
Slide 5: First Half Result Overview
FIRST HALF RESULT OVERVIEW For personal use only • 8.8% TTV growth to $8.1b – has almost doubled in 8 years • 4.6% revenue growth to $1.1b – soft commission growth but over-ride and super over-ride earnings maintained • $141million actual (statutory) PBT – includes $3.4m Top Deck contribution • $100
Slide 6: Margins & Costs
MARGINS & COSTS For personal use only • 13.6% income margin – down on PCP, above longer term average • Year-on-year movement linked to lower gross margins (front-end commissions) in Australia and Canada • 1.7% net margin • Cost growth – new wage structures, ongoing business investment • Looking for
Slide 7: Cash & Cash Flow
CASH & CASH FLOW For personal use only • General cash up 6.8% to circa $429.4m – almost doubled in 5 years • Borrowings lowered to $31.9m – expensive India debt ($19m) retired • Stronger positive net debt position – almost $400m at Dec 31 • $68.1m operating cash outflow during 1H – PCP $124.5m outfl
Slide 8: Shareholder Returns
SHAREHOLDER RETURNS For personal use only • Actual EPS of 99.7c (PCP: 110.3c) • Fully franked 55c per share interim dividend – in line with FY2014 • 55.2% of actual NPAT returned to shareholders
Slide 9: Network Growth
NETWORK GROWTH For personal use only • 4% shop/business growth to 2759 – Just below targeted range (5-7%) • Expansion milestones 300th shop/business opened in USA 250th shop opened in Canada 100th shop opened in Asia/Middle East region • New hyperstores in Australia (Darwin), USA (LA & Philade
Slide 10: YTD Results Summary
YTD RESULTS SUMMARY For personal use only $’ million Dec 2014 Dec 2013 % TTV $8.1b $7.5b 8.8% Revenue $1,103m $1,054m 4.6% Income margin 13.6% 14.1% (50bps) Net margin (underlying) 1.7% 2.0% (30bps) Underlying*** Profit Before Tax $137.6m $146.3m (5.9%) Statutory*** Profit Before Tax $141.0m $155.0m
Slide 11: The Business
For personal use only THE BUSINESS
Slide 12: Operational Highlights
OPERATIONAL HIGHLIGHTS For personal use only • Record sales in all 10 countries/regions in local currency • Record EBIT in UK, South Africa, Singapore and Greater China • Best 1H result in USA since Liberty and GOGO acquisition • Combined overseas EBIT up 25% to $25.3m • Overseas growth partially of
Slide 13: Gaining Scale Overseas
GAINING SCALE OVERSEAS For personal use only Overseas 1H TTV Overseas 1H EBIT 4.0b 30m 3.5b 25m 3.5b 25.3m 3.0b 3.0b 20m 2.5b 20.2m 2.4b 2.5b 18.9m 2.0b 2.2b 15m 15.4m 1.5b 10m 12.1m 1.0b 5m 0.5b - - Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2010 Dec 2011 Dec 2012 Dec 2013 Dec 2014
Slide 14: Australia
AUSTRALIA For personal use only • Leisure and corporate travel sales up – 5% overall TTV growth • Corporate TTV topped $1.1b and profits in line with PCP • Record amount of new corporate business won – improved strike rate in winning national and multi national accounts • Unique products launched an
Slide 15: Australia
AUSTRALIA For personal use only • Bottom-line leisure results lower than initially expected and impacted by: – Lower gross margins (consultants lowering commissions to convert sales) – Costs and investments (wages, shop fit-out and projects) – Subdued sales growth following FY14 downturn (lower prod
Slide 16: Star Performers
STAR PERFORMERS For personal use only • Bikes – Pedal Group JV generated $29.3m in sales, up 24.5% – Almost $1.7million in EBIT (up 12%) • Travel Money – $2.6million in 1H EBIT, now one of FLT’s fastest growing businesses – Expanding network of standalone & implanted shops (subsidising rent) – Prese
Slide 17: Star Performers
STAR PERFORMERS For personal use only • Flight Centre Business Travel – Mixes business (small corporate accounts) with leisure – EBIT up 15% and circa $130m in turnover in Australia alone – • Stage & Screen and Campus Travel – 20%+ EBIT growth from corporate niche brands
Slide 18: UK
UK For personal use only • FLT's largest profit contributor after Australia. • 1H EBIT of $19.8m – 23.5% CAGR over past 5 years • $320k EBIT contribution from Ireland acquisition (Travelplan) • TTV up 17% in local currency and could top GBP1b during FY15 • Focus on becoming a “Travel Experience Comp
Slide 19: USA
USA For personal use only • TTV exceeded $AUD1billion (FLT’s 2nd largest region by sales) • Significant reduction in 1H losses and profitable by Jan 31, 2015 • Strong 2H profits expected – seasonally stronger period for Liberty & GOGO • On track to surpass full year target of $USD17m-$USD18m EBIT (c
Slide 20: USA
USA For personal use only • Expanding Liberty’s footprint ahead of peak 2H booking period • New LA & Philadelphia (pictured below) hyperstores • Pennsylvania & New Jersey megastores • EuroGuru program helping to grow sales in 12m passenger-per-year European travel sector & poised for expansion
Slide 21: Rest of the World Segment
REST OF THE WORLD SEGMENT For personal use only • Strong performance in Singapore, Greater China and South Africa – Record sales and profits. Singapore TTV up 47% in local currency • Solid sales growth in NZ but lower profits – Investing in people (new wage structure) and network (shop refurbs) • St
Slide 22: Results by Country
RESULTS BY COUNTRY For personal use only CANADA INDIA GREATER CHINA UNITED KINGDOM TTV: $553m, up 9% in TTV: $180m, up 11% in TTV: $109m, up 19% in AUD (up 13% in lc) TTV: $856m, up 23% in AUD (up 6% in lc) AUD (up 15% in lc) EBIT: ($2.7m) AUD (up 17% in lc) EBIT: $1.1m EBIT: $0.9m BUSINESSES: 253 E
Slide 23: The Strategies
For personal use only THE STRATEGIES
Slide 24: Our Killer Theme
Our Killer Theme For personal use only Brand and Information is A Sales and Unique Product: Experts, not Agents: Redefining the Shop: Blended Access: specialisation: Power: Marketing Machine: Evolving our brands Making, combining Ensuring each brand’s Ensuring corporate, Ensuring FLT’s brands Profil
Slide 25: Travel Agent to Travel Retailer
TRAVEL AGENT TO TRAVEL RETAILER For personal use only TRAVEL THE PROVIDERS CUSTOMER
Slide 26: 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 27: 1) Brand & Specialisation
1) 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 28: 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 29: Unique Product – Journeys
UNIQUE PRODUCT – JOURNEYS For personal use only
Slide 30: Unique Product – SmartSTAY
UNIQUE PRODUCT – SmartSTAY For personal use only The sma rter to book way accomm your odation . Three va features lu Valid ye e added inclusio ar round ns On our flexible At no ex corp tra cost! orate rates Increase b enefits d Greater savings pr Enhanced oductivity travel ex perienc e Downlo ad the
Slide 31: 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 32: Showcasing Airfare Expertise – London
SHOWCASING AIRFARE EXPERTISE – LONDON For personal use only
Slide 33: 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 no long counter creates a barrier between the customers and our sales experts • A place that needs to have zones to reflect the different pr
Slide 34: New Shop Design – FC Chermside
NEW SHOP DESIGN – FC CHERMSIDE For personal use only
Slide 35: New Shop Design – ET Ballina
NEW SHOP DESIGN – ET Ballina For personal use only
Slide 36: 5) Blended Access
5) BLENDED ACCESS For personal use only Our business is always open when and how you want
Slide 37: 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 38: New Singapore Website
NEW SINGAPORE WEBSITE For personal use only
Slide 39: 6) Information Is Power
6) INFORMATION IS POWER For personal use only PROFILES PATTERNS PREDICTIONS
Slide 40: Targeted Direct Mail
For personal use only TARGETED DIRECT MAIL
Slide 41: 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 42: Basic Enquiry to Rich Content
BASIC ENQUIRY TO RICH CONTENT For personal use only
Slide 43: New Look Press Ads
For personal use only NEW LOOK PRESS ADS
Slide 44: The Future
For personal use only THE FUTURE
Slide 45: 2014/15 Guidance
2014/15 GUIDANCE For personal use only • Targeting $360m-$390m underlying PBT (excluding any significant unforseen items that may occur) • Guidance also excludes Top Deck profits • Top of the range represents 4% growth on FY14 record underlying PBT – bottom of the range represents a 4% decline • Exp
Slide 46: Market Conditions
MARKET CONDITIONS For personal use only • Some ongoing volatility in Australia • Impossible to predict timeframe for recovery, but some positive signs – Good customer enquiry in key leisure brands – Solid Travel Expo results – Record account wins in corporate travel – Market-share growth in some are
Slide 47: Opportunities
OPPORTUNITIES For personal use only • Continued growth in overseas profits during seasonally stronger 2H • Fast-track corporate growth in Australia • Enhanced leisure travel productivity • Flight Centre’s Widest Choice of Airfares – if it flies, we’ve got it! • Ongoing focus on Killer Theme and mini
Slide 48: Growing the Network
GROWING THE NETWORK For personal use only • Focus on organic growth • Exporting brands within the FLT network – Campus Travel, Travel Money, Stage & Screen • New geographies likely – Netherlands and Dublin leisure businesses planned as an extension of UK business • Some strategic acquisitions possib
Slide 49: Questions?
For personal use only QUESTIONS?
Slide 50: Appendices
For personal use only APPENDICES
Slide 51: Statutory v Underlying PBT
STATUTORY v UNDERLYING PBT For personal use only $’ million Dec 2014 Dec 2013 % Statutory Profit Before Tax $141.0m $155.0m (9.0%) Top Deck contribution ($3.4m) - - One-off gain within FCGP business - ($8.7m) - Underlying Profit Before Tax $137.6m $146.3m (5.9%) • $3.4m profit contribution from Top
Slide 52: Five-Year Growth Trajectory
FIVE-YEAR GROWTH TRAJECTORY For personal use only Dec 14 Dec 13 Dec 12 Dec 11 Dec 10 TTV $8,138m $7,480m $6,593m $6,181m $5,668m Income margin 13.6% 14.1% 13.9% 13.9% 14.0% EBITDA $164.0m $179.3m $148.9m $137.5m $121.3 m PBT $141.0m $155.0m $129.5m $119.7m $101.1m NPAT $100.3m $110.8m $91.8m $81.6m
Slide 53: 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 54: 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
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