Flight Centre shares rally despite softer trading outlook
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More news: Shares in Flight Centre lifted in early trading on the ASX despite the travel agency setting softer-than-expected full-year guidance and deferring its FY25 margin target.
Flight Centre shares were up 3% to $17.13 by 11:20am AEDT, having lowered more than 20% over the last month.
The company's shares have tumbled in recent weeks after a weaker-than-expected trading update for the September quarter, followed by a wider sell-off in ASX travel groups last month.
Flight Centre sets softer-than-expected profit guidance
The news: Listed travel agency Flight Centre set softer-than-expected profit before tax (PBT) guidance and pushed back its margin target for the 2025 financial year.
The numbers: Flight Centre will target underlying PBT, the company's preferred measure, of between $365 million and $405 million in FY25.
The midpoint of $385 million represents 20% growth on FY24, but falls 3.1% shy of the consensus forecast of $397.4 million, according to RBC Capital Markets.
The context: In prepared remarks ahead of this morning's annual general meeting, chief executive Graham Turner also acknowledged that the company is "now unlikely" to achieve its 2% underlying PBT margin target for FY25, and has been pushed to a "medium-term objective".
"This should have minimal impact to consensus, but might disappoint some investors," RBC analyst Wei-Weng Chen said.
What they said: "Our primary short-term focus is on profit growth, while increasing [total transaction value], which means we will not slow growth in profitable but lower margin businesses that continue to perform strongly in order to artificially achieve the 2% target," Turner said.
"Instead, our margin improvement efforts will again focus on the key drivers that have underpinned our solid progress so far."
The source: ASX announcement
