SPENDING DIPS, FLIGHT CENTRE CUTS FORECAST

SPENDING DIPS, FLIGHT CENTRE CUTS FORECAST
A SPENDING slump has caused Flight Centre (ASX: FLT) to lower its profit expectations for the financial year, the company now projecting a profit before tax at the low to middle point of current market guidance.

Managing director Graham Turner (pictured) says the company’s underlying profit before tax is now expected in the bottom half of the $370 million to $380 million proposed range. 

Despite the revision in market guidance, the result is still expected to represent 8-11 per cent growth on full-year 2012/13.

Turner attributes the revision to a decline in consumer confidence from the previous quarter, notably domestically. 

“Our ability to hit the top of our targeted range has been adversely affected by disappointing leisure travel results in Canada and a tougher trading environment for the large Australian leisure business during the past eight weeks,” says Turner.

“The slowdown was most evident in May and corresponded with the widely reported decline in Australian consumer confidence.”

Turner says current conditions are “uncertain” – but is confident that continued downward pressure on airfares will assist recovery.

“While demand often rebounds quickly after a short-term downturn in the leisure market, conditions are uncertain and it is obviously impossible to predict the timeframe for recovery.

“Cheap fares, which the market is currently experiencing, have historically proven to be a key factor in stimulating demand and a leisure travel rebound, as travellers move quickly to secure bargain flight deals before they return to more sustainable levels.”

Additionally, Turner says the company is still on track for record full-year results.

“Australian leisure continues to grow and increase market share, it is just not achieving the high levels of growth as it recorded earlier in the year,” he says.

“Several countries are on track to achieve record full-year results, including Australia, the UK and the USA.

FLT’s underlying results exclude $11 million in penalties from the ACCC’s case against the company and any potential goodwill fallout, and systems improvements which cannot yet be quantified.

The company’s full-year results will be released in August.


Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Looking for a credit or charge card that’s built for your business? Try American Express
Partner Content
A good credit card should work for you, not against you, and let you and your business ...
American Express
Advertisement

Related Stories

Devine abandons Alba to upsize at Burleigh Heads with $400m Burly tower

Devine abandons Alba to upsize at Burleigh Heads with $400m Burly tower

In a sign that the heat has yet to come out of the Gold Coast prope...

Mandatory COVID isolation to end nationally mid-October

Mandatory COVID isolation to end nationally mid-October

National Cabinet has today determined that mandatory isolation peri...

Sunset on the horizon in 2023 for developer Sunland

Sunset on the horizon in 2023 for developer Sunland

A developer behind some of the Gold Coast's most iconic buildin...

Tritium teams up with JET Charge to create world’s longest EV highway in WA

Tritium teams up with JET Charge to create world’s longest EV highway in WA

Brisbane-based electric vehicle charger group Tritium DCFC (NASDAQ:...