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Qantas to return $500m to investors after record earnings

Nicholas Grove  |  24 Aug 2016Text size  Decrease  Increase  |  

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The Australian flag carrier will return up to $500 million to shareholders after posting what it says is the best result in its near century-long history.

 

Qantas Group (ASX: QAN) has posted a record 57 per cent rise in underlying profit before tax to $1.53 billion for fiscal 2016, which will enable the resumption of dividend payments, the airline said on Wednesday.

The result was the best in the company's 95-year history, with earnings per share (EPS) nearly doubling to 49 cents, only just below Morningstar's expectations for EPS of 52 cents.

Statutory profit after tax rose 84 per cent to just over $1 billion.

Operating cash flow rose 38 per cent to $2.8 billion, while net free cash flow stood at $1.7 billion, Qantas said in a statement to the ASX.

The airline said it will return up to $500 million to shareholders, after returning more than $1 billion over the past year.

Qantas declared a fully franked final ordinary dividend of 7 cents a share ($134 million in total), to be paid on 12 October 2016.

In addition, the airline said it will carry out a further on-market share buy-back of up to $366 million, subject to shareholder approval.

"Where there is surplus capital in future the group will first distribute to shareholders via an ordinary dividend, in conjunction with share buybacks, special dividends or a capital return should additional surplus exist," Qantas said.

"Future dividends will be partially franked or unfranked, until Qantas' franking credit balance--which will fall to $26 million after the current dividend is paid--increases."

For the year, Qantas Domestic, Qantas International, the Jetstar Group and Qantas Loyalty all reported record results, the company said.

Qantas Domestic reported record underlying earnings before interest and tax (EBIT) of $578 million, up 20 per cent year on year.

Qantas International reported record underlying EBIT of $512 million, up 92 per cent on the prior year.

The Jetstar Group reported record underlying EBIT of $452 million, up 97 per cent, while Qantas Loyalty reported record underlying EBIT of $346 million, up 10 per cent.

The group's return on invested capital was 23 per cent, compared with 16 per cent at 30 June 2015, Qantas said.

Qantas did not provide any earnings guidance due to "industry and economic dynamics".

"The short-term outlook remains subject to variable factors, including oil price movements, foreign exchange movements and global market conditions," it said.

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Nicholas Grove is a Morningstar journalist.

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