There seems to be a bullish trend emerging in the early flow of corporate earnings updates for the December half.
Last Friday the Commonwealth Bank surprised with a solid 44% rise in forecast net first half earnings to $2.9 billion.
But that was after oil and gas contractor, Worleyparsons, surprised with an earnings downgrade of around 12%.
Several smaller companies have delivered updates with small upgrades, such as online travel group, Webject.
But yesterday Computershare, Data3, Collection House and Flight Centre all revealed solid earnings improvements, especially Flight Centre, which has ridden the surge in offshore travel by Australians in recent months, thanks to the better economic conditions and the stronger dollar, which makes going overseas more attractive for travellers.
Despite these encouraging updates the market ignored them and finished down yesterday by around 1%.
Flight Centre was the star with its shares jumping by more than $1.80 or over 10% at one stage after the company revealed earnings could be up by more than 30%.
The day’s high of $19.51 was a two year peak for the stock.
The shares settled back to close up over 7% at $19.00.
The company said stronger than expected ticket sales in the December half was a major factor, along with stabilised losses in some parts of the US businesses.
Flight Centre said it expects to report a pre-tax profit of between $160 million and $180 million this year, up from its earlier forecasts of between $125 million and $135 million.
This guidance excludes any significant one-off expenses.
Two weeks ago the online booking service Webjet reported a surge in the value of ticket sales in the first half, and last month Qantas said an improvement in average air fares and demand was set to steer it back to a first half profit.
Now Flight Centre said the improved guidance reflected a stronger than expected first half.
The company said it now expects to post a pre-tax profit of up to $74 million for the half, 19% up on the same period last financial year.
Flight Centre’s managing director, Graham Turner, said in a statement that the company was "well placed to record stronger profit growth" in the second half provided global trading conditions continued to gradually recover.
The travel agency’s performance in the first half of last financial year was adversely affected by the global financial crisis.
"Trading conditions have stabilised globally during the first half, although the rate of actual improvement has varied from country to country," he said.
Ticket volumes in some countries, including Australia, were up more than 20% while losses in the US remain consistent with Flight Centre’s initial forecasts of its troubled travel retailer, Liberty, posting a $5 million trading loss while its FCm Travel Solutions corporate businesses is set to be $1.5 million in the red.
Flight Centre said it expects to see stronger results in the US in the second half because it is traditionally the peak booking season for American travel agencies.
The company will release its half-year accounts on February 25.
