Flight Centre shares dive on downgraded guidance
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More news: Shares in Flight Centre dropped nearly 6% to $21.72 after the travel agency trimmed its full-year profit and revenue guidance following cuts in airfares, challenging market conditions and impairments.
RBC Capital Markets analysts noted the result was a "modest underlying PBT [profit before tax] beat" despite the downgrade. But they said in a note that it was "potentially not enough to offset investor concerns about lower TTV growth and accounting adjustments.
Flight Centre now expects FY24 total transaction volumes (TTV) to be in line, rather than surpass, its FY19 peak of $23.7 billion while profit before tax is now likely to be between $316 million and $324 million, down from $300 million to $340 million range.
Flight Centre trims full-year guidance
The news: Flight Centre has trimmed its full-year profit and revenue guidance following cysts in airfares, challenging market conditions and impairments.
The numbers: The travel agency now expects FY24 total transaction volumes (TTV) to be in line, rather than surpass, its FY19 peak of $23.7 billion.
Full-year profit before tax is now expected to be between $316 million and $324 million, down from the previous guidance range of $300 million to $340 million, but still more than double the previous year’s figure.
The context: The revised profit range excludes $4 million in trading losses for the Discova Central Americas (DCA) destination management company, following the group's decision to close the business.
Managing director Graham Turner said while market conditions had been challenging during FY24, TTV growth remained solid as customers prioritised travel over other areas of discretionary spend.
However, year-on-year growth rates were adversely impacted by the closure of the Indian wholesale foreign exchange business and significant airfare price deflation. Average international airfares dropped 6% globally during the second half, and by almost 13% in Australia, which offset the circa 10% growth in ticket volumes locally in the second half.
What they said: "While this has slowed our TTV growth, we welcome this deflation and believe it is a potential tailwind in the months ahead, given it is likely to stimulate further demand for international travel," Turner said.
The source: ASX announcement
