Australia’s largest travel retailer reports slower than normal sales growth
Flight Centre Travel Group has provided a market update this afternoon, saying it expects its underlying profit before tax (PBT) for the 12 months to 30 Jun 2015 to be between $355 million and $365 million.
At mid-point, the flagged underlying profit of $360m for the full year is 4.4% lower than the record $376.5 million underlying PBT set during “superior trading conditions” in 2013/14, Flight Centre said.
The company said actual or statutory PBT during 2013/14 was $323.8 millilon.
Flight Centre said contributing factors for the expected lower PBT included lower gross margins and revenue, “brought about by consultant discounting to stimulate demand among cautious leisure consumers during the first half and in response to competitive market pricing in the corporate travel sector”, higher costs related to the front-end wage change implemented in Aug last year and “slower than normal sales growth.”
FLT managing director Graham Turner said the company’s international business will deliver solid profit growth, “but the Australian business will not achieve its normal growth trajectory”.
Total Transaction Value for 2014/15 is expected to rise about 3% on last year.
Turner said demand for the USA remains strong and looks set to continue into the new year, citing a “price war” currently underway on the Australia-Honolulu route.
FLT reported that all businesses will be profitable, except Canada, where a new senior management team is now in place, ready to “improve performance, particularly in leisure travel after two disappointing years”.
The group also flagged an expansion of its hyperstores in the US and UK, with locations earmarked to debut in Dublin, Richmond and Washington.
FLT’s Stage & Screen and Campus Travel corporate brands will also be deployed in the UK and USA respectively, the company confirmed.
More details in today’s issue of Travel Daily.