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Does Qantas Airways Limited’s performance also translate into strong shareholder returns?

Team Veye | 26 Sep 2019 ASX - QAN
Does Qantas Airways Limited’s performance also translate into strong shareholder returns?

Qantas Airways Limited (ASX: QAN)

Qantas Airways Limited (ASX: QAN) on 22 August 2019 presented its FY19 Results

The Qantas Group has achieved an Underlying Profit Before Tax of $1.30 billion and a Statutory Profit Before Tax of $1.27 billion for the Financial Year 2019. 

(Chart Source: TradingView)

Qantas Group Posts Record Revenue, Strong Profit in FY19

  • Underlying Profit Before Tax: $1.30 billion (down 17%) 
  • Statutory Profit Before Tax: $1.27 billion (down 6%) 
  • Record revenue for the Group 
  • Statutory Earnings Per Share: 54.6c (flat on last year) 
  • Return On Invested Capital: 18.4%
  • Net free cash flow: $1,244 million 
  • Shareholder return of 13 cents per share fully franked dividend, plus an off-market buyback of up to 79.7 million shares 
  • $1,250 staff travel bonus for 25,000 non-executive employees, worth $32 million 
  • Direct New York and London to Sydney research flights for Project Sunrise announced.

 

While the Underlying result was 17 percent lower compared with the Group’s record profit in FY18, it was impacted by a $614 million increase in fuel costs from higher oil prices and a further $154 million of the foreign exchange impacts on non-fuel net expenditure.

The result was also impacted by a $92 million non-cash expense on provisions for items including employee leave entitlements – part of an accounting requirement that means this charge increases when interest rates fall.

All key parts of the Group’s portfolio remain strongly profitable, generating significant cash flow that allows for ongoing investment as well as shareholder returns. (Data Source – Company Reports).

 

Veye’s Take

Qantas Group delivered an Underlying Profit Before Tax of $1.3 billion and a Statutory Profit Before Tax of $1.27 billion for Financial Year 2019. It’s a strong result considering some of the headwinds that the Group managed in the year. Higher oil prices put their fuel bill up by over $600 million. A lower Australian Dollar impacted them by more than $150 million. And Qantas had a $92 million non-cash expense on provisions for items including employee leave provisions. Its revenue was at record levels. Qantas Group’s debt is below the bottom of their target range, and statutory earnings per share have remained at the record levels that were achieved last year. The Group’s performance also translates into strong shareholder returns. As per the chart, the stock is likely to continue moving upwards. Veye maintains a "Hold" on “Qantas Airways Ltd” at the current price of $6.24

Disclaimer

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