FCTG profit expectations downgraded but also predicts “rapid FY21 rebound”.
Flight Centre has just released its results for the six months to 31 December 2019, with a record first half TTV of $12.4 billion, up 11.2%, reflecting the company’s strongest growth rate since 2016.
The underlying $102.7 million pre-tax profit was in line with guidance, but significantly down on the $140.4 million result for the previous corresponding period. The statutory profit, of $38.8 million, reflected several previously flagged non-recurring expenses and non-cash adjustments.
The results were adversely affected by “various world events that affected global travel patterns and contributed to the high profile collapses of Thomas Cook, Cox & Kings and several smaller operators” – including Brexit, the US-China trade wars, unrest in Hong Kong and a subdued Australian leisure environment.
Flight Centre said its profit was also hit by under-performance in some businesses and brands, predominantly in the leisure and in-destination sectors.
MD Graham Turner said “within our business we have continued to proactively address internal factors that have impacted profit growth recently and have also initiated strategies to deliver further market share growth and greater efficiency in the future”.
The company is expecting COVID-19 to result in subdued travel activity through to the the end of June. However based on the experience with SARS in 2003 and 2004, there is the possibility of a rebound resulting in strong outbound travel growth once the issues subside.
Flight Centre is now forecasting its underlying full year pre-tax profit will be between $240 million and $300 million. Turner said “in this uncertain climate we will seek to capitalise on any opportunities that arise and believe we are well placed to weather this challenge”.
He said the company would work with suppliers to aggressively promote travel to destinations that are not significantly affected, including Australia, the Americas and the UK.
More details in today’s issue of Travel Daily.