Chris Jenkins News editor

Chris works from BRW's Sydney newsroom. He has previously written and edited in print and online for titles including The Australian Financial Review and The Australian.

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Cost cuts push Graham Turner’s Flight Centre to record profit

Published 27 August 2013 12:06, Updated 27 August 2013 12:39

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Cost cuts push Graham Turner’s Flight Centre to record profit

‘Easily the best CEO in Australia’ . . . Graham Turner of Flight Centre. Photo: Glenn Hunt

Rich Lister-led travel group Flight Centre has booked a $246.1 million profit after tax for the full year to June, up 23 per cent on the year previous and the company’s 14th annual profit in a row.

Commenting on the results, executives said Flight Centre had been helped throughout the year by rents increasing at rate slower than shop and business growth, as well as by lower sales and marketing costs.

“Key result drivers for 2012-13 included business growth, margin improvement, productivity enhancements and diversity,” Flight Centre managing director and BRW Rich 200 list member Graham Turner said.

The company predicted a profit before tax of $370 million and $385 million for 2013-14, but Turner said that given current conditions, this would be far from easy.

“Achieving 8 to 12 per cent underlying PBT growth will not be a formality for a company of our size and given the challenges that can arise, but we are well placed to weather any storms,” he said.

Strategic acquisition ahead

Flight Centre expects most of its growth to be organic, but says it “expects to pursue some strategic acquisition opportunities” with companies that can be vertically integrated without Flight Centre having to take on much in the way of additional capital assets.

Flight Centre declared a fully-franked final dividend of 91¢ per share, payable October 18.

Dividend yield alone will provide a significant payday for Flight Centre’s founders for 2013. Managing director Turner, who ranked at No. 58 on the 2013 BRW Rich 200 with a fortune estimated at $720 million, holds 15,298,428 shares in the company.

Of the other co-founders, Geoff Harris (No. 49 on 2013 Rich 200) holds approximately 15,635,819 shares, while Bill James (No. 64) holds 13,039,750.

Despite Flight Centre’s stellar run, Turner draws a relatively modest salary of around $700,000.

In May co-founder Harris told BRW Turner was “easily the best CEO in Australia. He’s been there for 30 years. How many other CEOs can you point to that have been there for that long and achieved what he has?”

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