Flight Centre is back to the future with dividends

Happy first day of spring, Superheroes!

Mining company execs are this week’s endangered species (more on that further down), and many of you were buying volatility ETFs. What do Superheroes know that we don’t? 

Let’s get into it.

Flight Centre is back to the future with dividends

Thought Flight Centre was a dying beast of the ASX? Think again.

The age of the travel agents is not over—and Flight Centre’s full-year report proves it. Shareholders knew this already because its share price has seen an almost 50% pop this year.

But up until this point, the company had been posting losses since the pandemic hit.

This year, it had revenue of $22 billion and a profit of $301.6 million…and plans to pay out half of that in dividends.

🤔 What’s changed?

While the tourism industry may have suffered considerably during the pandemic, it forced Flight Centre to shed jobs fast and bring its systems and processes into this century.

Thanks to COVID-19, it’s been able to build back with a much leaner workforce. Its revenue per full-time employee is up over 50% since FY19.

😱 But aren’t we in a cost-of-living crisis?

Well, older generations (Flight Centre’s core target market) are doing pretty well in an inflationary environment.

TL;DR: Boomers are cashed up and spending big on travel, while younger people feel the weight of rising mortgage payments, rent and living expenses.

Webjet and Qantas have reported big earnings, too. So it seems travel stocks are having some serious time in the sun right now.

Novo Nordisk is in excellent shape

The Danish pharma company behind breakthrough weight-loss drug Ozempic just broke through the US$400 billion valuation mark. 

This week, Novo Nordisk announced that its other flagship obesity drug, Wegovy, also reduced the risk of heart failure—and the news catapulted the company’s fortunes. 

Now, the biotech is worth more than Denmark’s annual GDP (and McDonald’s and Netflix combined). It only has to beat luxury fashion group LVMH to win the title of Europe’s most valuable company.

💉 The right medicine

While earnings for the latest half-year weren’t quite what Wall Street was expecting last month, sales were still up an impressive 30% and profits shot up by a massive 43% on the same period last year.

But this isn’t the story of a one-hit wonder. The company’s been around for a century. 

It’s the story of how a few big successes can transform even the most established companies.

What else is in its R&D pipeline?

🔦 Some other things we’re shining the Spotlight on:

• 12TH ONE BITES THE DUST: Fortescue Metals was hit by a mass exec exodus this week. Iron ore CEO Fiona Hick and CFOs Christine Morris and Guy Debelle (the former RBA deputy governor) all quit, adding up to 12 execs gone in 3 years. *Cue eyebrow-raising.* Its latest FY22 report brought a 23% profit dip. Oh, and there’ll be no more 10% profit allocation for its clean-energy arm either. 
• CH-CH-CHECK IT OUT: Shopify jumped 10% overnight after the e-comm tech announced its merchants can now offer Amazon’s “Buy with Prime” check-out option for customers. Markets were surprised because Shopify previously said it was in violation of its terms of service.
• PHANTOM FLIGHTS: Qantas has confirmed it will refund $570m worth of flight credits. But only because the ACCC grilled the airline for selling tickets for cancelled flights in a senate hearing this week. The consumer watchdog is now seeking a record penalty of $600m. Its share price isn’t too affected, though.

That wraps up another weekly Spotlight.

Thanks to all of you for being here and reading!

P.S. Don’t forget that Wall Street will be closed on Monday the 4th for the Labor Day long weekend. Normal trading hours will resume from Tuesday 11:30 PM (AEST).