Earnings Wrap: Flight Centre declares its first post-covid dividend, Brambles guides to more growth

Brambles (ASX: BXB): Solid growth with more to come

One liner: Mixed FY23 earnings vs. expectations, mid-teens growth across most financial metrics, expects profit growth of 9-12% in FY24.

• Revenue US$6.08bn, up 10% but below consensus US$6.19bn

• EBIT US$1.07bn met consensus

• Final dividend US$0.14

FY24 guidance (at constant FX rates)

• Revenue growth of 6-8%

• Underlying NPAT growth 9-12%

• Free cash flow US$450-550m, below consensus US$566.7m

• CEO Graham Chipcase commented ‘ While we expect some reversal of FY23 working capital benefits in FY24 and continued investments to support future value creation, the cash flow benefits of asset productivity initiatives, progressive destocking and moderating lumber costs are expected to support positive Free Cash Flow generation after dividends in FY24.

New CFO:

• Joaquin Gil Gil was appointed Deputy CFO of Brambles in June

• Prior to joining Brambles, Gil held senior finance and management roles with Coca-Cola and Keurig Green Mountain

• Nessa O'Sullivan announced her impending retirement in Feb this year

Flight Centre (ASX: FLT): Earnings turnaround, dividends are back

One liner: Declares unexpected first post-COVID dividend on the back of an almost $485 million EBITDA turnaround for FY23, earnings mostly in-line given July profit guidance announcement.

• Revenue of $2.28bn, up 126.4% and in-line with consensus

• Group TTV of $21.9bn, up 112% and in-line with consensus

• Underlying net profit of $75.7m from a $272.6m loss a year ago

• Final dividend of 18 cents per share

  • Macquarie's FLT coverage back in February did not forecast any dividends in FY23

Management attributed the result to a combination of:

• Improved market conditions after travel restrictions were removed globally,

• Improved industry dynamics, specifically airline capacity growth, and

• Normal seasonality (key booking periods are typically during the six months to June 30).

The strength of the result appears to have taken management by surprise, too led by post-pandemic resurgence (and unexpected mid-downturn resilience) of travellers, both leisure and corporate.

“Our $485 million profit turnaround exceeded our initial expectations as our diverse global business benefitted from the removal of unprecedented restrictions that were imposed on travellers for some two-and-a-half years, and from the strategies that we implemented,” said Managing Director Graham Turner

Outlook

• Early progress towards 2% underlying profit before tax (PBT) margin target for FY25

• New capital management policy in place for FY24, given solid cash flows and cash generation, with FLT to allocate 50-60% of NPAT to dividends and/or buy-backs

•  More favourable industry dynamics for travellers as competition on international routes increases and as airfare prices gradually start to decrease more significantly

• Further leisure and corporate TTV growth; and

• Gradual revenue margin increases and further cost margin decreases, particularly in corporate, as the company continues to target a 2% underlying profit before tax margin for FY25.

Dicker Data (ASX: DDR): Work-from-home weighs on demand

One liner: Earnings and revenue in-line with guidance, first-half demonstrated stronger signals of a normalising supply side, no guidance.

• Gross sales of $1.59bn, up 9.4%

• EBITDA of $70.6m, up 15.4% and in-line with guidance of $71m

• Net profit before tax of $54.1m, up 7.8% and in-line with guidance of $54m

“We performed well in the first half of 2023. Gross sales are up over 9%, despite a challenging market where traditionally strong segments, such as devices, went into decline. Our team continues to outperform the market and we are well-positioned for the remainder of our FY23," said CEO David Dicker.

Outlook

• "Demand from the Company’s base of over 10,200 partners across Australia and New Zealand (ANZ) has remained strong, however, the performance of certain technology segments, such as devices, continued to be impacted by accelerated technology refresh cycles undertaken by businesses and governments in recent years to enable hybrid."

Healius (ASX: HLS): Post-covid pains

One liner: Missed on revenue but met EBIT consensus, Covid testing revenues down 89% on FY22 but non-Covid revenues up 6.3% to $1.6bn.

• Net loss of $367.8m from $307.9 million profit in FY22

• Revenue $1.71bn missed consensus of $1.74bn

• Underlying EBIT of $99m in-line with $98.9m consensus

Chief Executive Officer and Managing Director Maxine Jaquet said the firm was now “well-positioned for growth” after its transition back to “business-as-usual operations”. “Our EBIT margins have expanded by 240 basis points in the last six months as we have delivered significant improvements in our cost and productivity ratios,” Jaquet said. Outlook:

• Expects the Pathology market will trend higher in 2H24, while the Imaging market will continue with its current strong growth rates.

• Expects its gearing to remain within bank covenants during FY24.

• Remains intent on resuming dividends with the support of more normal volumes and operational cashflows.