Yet another earnings upgrade statement from Flight Centre.
They are becoming as regular, as well, clockwork and this one must be the 7th or 8th in the past year.
Flight Centre (FLT) is Australia’s biggest travel agency and it’s having a good time, mostly from people leaving the country, not coming here, or those travelling within our borders.
Flight says that it expects pre-tax profit for fiscal 2008 to increase 40% to $212 million, because of the upsurge in overseas travel due to cheap international airfares during the year and the impact of the strong Australian dollar.
The company said the forecast rise to $212 million was within guidance, and compared with the $151.6 million earned in the 2007 financial year, which excludes the sale of the Brisbane head office in September 2006.
On June 18, FLT signalled the final profit in an update to the ASX: (was that upgrade 6, or 7? – there were so many during the year.)
"Continuing healthy sales growth globally during the second half of the year means the company now expects to exceed $210 million in pre-tax profit for the 12 months to June 30 2008.
"This represents a minimum 38.5% increase on FLT’s record pretax profit for the previous corresponding period of $151.6 million (excluding abnormal gain on the company’s Brisbane head office property sale during 2006/07)."
Besides confirming the result at around $212 million, the company said it "will be disappointed if it does not achieve a further 10-15% per cent pretax profit growth during 2008/09.
"Chief financial officer Shannon O’Brien said FLT’s established businesses in South Africa, New Zealand and the United Kingdom were expected to drive profit growth during 2008/09, along with Australia, where the strong dollar, near full employment and the availability of cheap international airfares continued to stimulate demand.
"With the momentum we have built globally and the strategies we have in place for overall improvement, we start 2008/09 in a position of strength. Mr O’Brien said.
"Our businesses continue to perform reasonably well, particularly in our established markets, and there is opportunity to grow our leisure, wholesale and corporate travel brands in all geographies.
"As we continue to develop, our focus will be on organic expansion but we will also consider strategic acquisitions and joint ventures in niche and growth sectors from time to time."
In yesterday’s near euphoric trading, FLT shares bounded ahead strongly to end up 11.7% at $17.86.
Meanwhile Swiss-French drug group, Sanofi-Aventis has surprised by buying the consumer unit of Symbion from Primary Health Care for $560 million a couple of weeks after Metcash pulled the pin on a deal to buy the associated pharmacy supply business.
Primary says it will use the funds to reduce the debt tied to the $2.7 billion takeover of Symbion in February.
The purchase gives Sanofi access to the largest local distribution of vitamin supplements.
"The sale of the Consumer Business will allow Primary to continue its focus on operating its core businesses and progress with the integration of the Symbion business,” Primary CEO Ed Bateman told the ASX yesterday
Primary’s consumer unit distributes to more than 3,500 health food stores and pharmacies with brands including Nature’s Own, Cenovis and Bio-Organics. Sanofi already provides a range of drugs in Australia and New Zealand to treat illnesses ranging from bone disease to allergies.
Sanofi-Aventis’ purchase is expected to be completed by the end of next month.
Primary’s shares rose 5% or 25c to $5.00 on the news. The shares are down 14%, including yesterday’s rise, this year.
Primary said it’s considering options for the pharmacy business acquired from Symbion.
That was left on the altar after Metcash pulled out of a deal to acquire it, then joint venture the management with Sigma Pharmaceuticals. The ACCC may not have approved Sigma’s involvement.
Metcash indicated that one of the reasons for abandoning the deal was the lack of value to it of the transaction: a view it said it had reached after due diligence.
