FLIGHT Centre Travel Group this morning issued a profit downgrade (TD breaking news), with difficult trading conditions in its Australian leisure business contributing to an estimated 10% drop in forecast earnings.
The company said the “challenging trading climate in Australia has corresponded with a period of significant change and disruption in the past two years,” with the company deploying a new GDS sales platform, introducing a new wage model for front-end sales staff, consolidating its brand structures and reviewing its shop network.
CEO Graham Turner said that while these changes had been now embedded, along with additional plans to address “short-term market challenges relating to soft TTV growth, costs and margin contraction within the leisure business,” the benefits expected to flow from these initiatives were not yet being realised.
Previously Flight Centre was targeting full year underlying profit before tax of up to $420 million, with that now revised to a $335 million-$360 million range.
Turner said the company expected its Australian leisure results to improve, but at the same time Flight Centre’s businesses outside of Australia were for the first time expected to generate more than half of group profit, while global earnings were also likely to be weighted towards corporate travel.
“We are performing particularly well in the USA and UK and are on track to achieve record profits in both of these countries and in several other geographies.
“The USA business, which is now poised to become our second largest business behind Australia in both profit and TTV terms, is on a strong growth trajectory,” he said.
Turner said while overall results for FY19 would be disappointing, FCTG was “well placed to deliver further growth in the future,” given its brand, geographic diversity, strong balance sheet and ability to evolve.
MEANWHILE Flight Centre has also strongly refuted claims made in legal action initiated by law firm Maurice Blackburn relating to staff underpayments – more on page three of today’s TD.
Source: traveldaily