Flight Centre eyes more overseas profit

28 Aug 2012, 4:26 pm   -   Source: AAP

Travel agency Flight Centre says it's aiming for overseas markets to contribute about half of its profits by 2017.

Travel operator Flight Centre expects to boost the number of its outlets around the world by up to eight per cent and add 1,000 new sales staff to its global workforce.

Flight Centre also expects to reap more income from its overseas offices this fiscal year as it targets the growing Asia and Middle East markets.

And it expects profits before tax to grow by five per cent at between $305 million and $315 million.

"Some people might argue that's conservative... but we feel it's going to be a pretty tough year overall, probably particularly in Australia," chief executive Graham Turner said during a conference call on Tuesday.

The company posted a net profit of $200 million in the year to June 30, up from $139.8 million in the previous year.

Mr Turner said by 2017, the group hopes for at least half its profits outside of Australia.

"We'd like to get close to a 50/50, or at least 60/40 split in terms of profit.

"The TTV (total transaction value) is about 50/50 now, and I think that will grow a little more in overseas jurisdictions."

Mr Turner said he saw reasonable opportunities for organic growth in expat-heavy markets and those where there were many "upmarket" customers.

"We're looking at the possibilities of small acquisitions in a couple of areas where we think we are underdone, or need some strategic purchases, or geographic purchases to set up in the corporate area, particularly in Asia, Singapore, Hong Kong, Dubai and India."

Mr Turner said the travel firm was also interested in establishing ground operations where it provides a majority of its business, such as Fiji, Phuket, and Bali.

In Australia, he said the market for corporate travel was growing in double-digit numbers, while leisure travel had been waning.

But that is expected to change as Flight Centre benefits from increased airfare competition in Australia.

"Virgin has thrown down the gauntlet to Qantas in their corporate, and for us this is not necessarily a bad thing, as we support both airlines," Mr Turner said.

"We're not too worried. With extra capacity, pricing might come off, but that would only encourage more travel, which would be a good thing for leisure travel."

"It might not be great news for the airlines, but generally it's quite positive for us, domestic tourism, and even corporates are saving a bit more money on some of their routes."

The group is also expecting to improve workforce productivity as it moves further from front-end sales to the online space.

That will mean getting rid of administrative tasks for its retail agents, and setting up online consultants.

Shares in Flight Centre closed 10 cents higher at $23.70 on Tuesday.

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