“Subdued trading environment” in Australia hits bottom-line results.
Flight Centre has just issued a profit update, saying conditions in Australia will make it difficult to achieve its initial target of a full year underlying pre-tax profit of $395m-$405m.
The company now believes the underlying result for 2014/15 will be between $360m and $390m, with underlying first half profit before tax coming in at $136m-$142m, compared to the $146.3m result for the previous corresponding period.
“While several countries, including the large United Kingdom and United States businesses, are on track to achieve record results during the year to June 30 2015, trading conditions in Australia remain challenging following the leisure travel spending slowdown late in 2013/14,” the company said.
The five months to 30 Nov have seen lower than normal leisure sales growth and slightly lower margins, while the company has continued to expand its network which has led to increased wage, occupancy and sales & marketing costs in relation to the previous corresponding period.
When the company set its growth targets in August it was hoped that the uncertainty around the Federal Budget would have abated and consumer confidence and spending would have started to rebound.
“Unfortunately we are yet to see tangible signs of a full recovery and the overall leisure travel market in Australia continues to be flat year-on-year,” said md Graham Turner, confirming that TTV is up about 2% in the Australian leisure business – significantly lower than the compound annual growth rate in the order of 10% achieved over the last five years.
More information in today’s issue of Travel Daily.