Flight Centre issues profit warning

06-FlightCentre_signage_2Flight Centre Travel Group will miss its full-year profit forecast despite record revenues, blaming a host of factors including the Australian federal election and the Zika virus.

Shares in the travel group dropped over seven per cent in afternoon trade yesterday, after Flight Centre said it still expects revenue for the year to June 30 to be above $19 billion but uncertainty over the UK referendum on EU membership, Zika virus and the Australian election were taking a toll.

“While we are disappointed to miss the short-term profit target we set in August last year, we are investing significantly in our future and in the strategies that will underpin our longer term growth,” said Graham Turner, managing director, Flight Centre.

“We are experiencing some uncertainty heading into the final six weeks of the year and during what is traditionally our busiest sales period, which makes it difficult to forecast final results,” Turner said.

Flight Centre said in a statement that airfare price wars were also a factor in revising guidance for underlying profit before tax to between $348.0 million and $359.0 million — two to five per cent down on 2015 and below its February forecast of $380 million to $395 million.

“On a positive note, all countries/regions were tracking toward sales records at the end of last month and South Africa, New Zealand and the UAE could deliver record full year profit. The Canada business has also returned to profit after disappointing results last year,” Turner said.

In Australia, the travel group’s turnover during the 10 months to April 30 has increased in both leisure and corporate travel and has exceeded the four to five per cent growth rate in Australian outbound travel during the nine months to March 2016.

The travel groups US market is set to deliver its second best full year result, behind last year’s US$16.5 million earnings before interest and tax contribution. In the UK, the company’s earnings have been adversely affected by investments made in new wage systems and unique product ranges that have exceeded sales expectations during their start-up phase.

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