Guidance represents profit growth of about 9% on record 2017/18 result.
Flight Centre Managing Director, Graham Turner, has just updated shareholders on the company’s current prospects, with an update indicating expectations of underlying profit before tax of between $390 million and $420 million for the full year to 30 June 2019.
For the current half the result is forecast to be between $140 million and $150 million, or growth of up to 7% on the prior corresponding period.
Turner said TTV was tracking slightly above the company’s longer term target of 7% annual growth, with overseas businesses driving profit increases, particularly the Americas operations.
However he said profit in the Flight Centre Australian leisure business was currently down year-on-year. The operation had not yet benefitted from the changes implemented last year – which included brand consolidation and technology updates – while the current Enterprise Bargaining Agreement negotiations and disruption associated with the ABC story on Flight Centre had also impacted profit.
“We believe the disruption is now abating and this, coupled with various other initiatives and refinements that are underway, will lead to better second half results,” Turner said.
Ongoing changes include network changes which will see the relocation of about 35 shops to better locations, and increases in staff numbers to return the network to capacity after its contraction last year.
Turner said the move to an EBA within Flight Centre and Student Flights in Australia was an “extremely positive step”. Assuming it is ratified it will result in a simpler structure, with higher base pay for staff while continuing to reward them with additional incentives. The EBA had also allowed the formalisation of other benefits such as additional leave, while other initiatives will see Flight Centre build on its success in retaining sales people including mentoring, a traineeship program, Money Coaches and Health Coaches.
More information in today’s issue of Travel Daily.