Flight Centre (FLT) is another major company which says it’s banking on a stronger second half to lift earnings for the full 2014-15 financial year.
The company’s AGM was told yesterday while the company’s started the new financial year in reasonable shape, the core Australian business is lagging.
So it is looking to boost growth in coming months to try and make sure it can ride an expected gradual recovery in demand and consumer confidence in the Australian travel market.
So far that reason, it wouldn’t surprise if next February (or even before then) the company reports lacklustre December half figures by its recent high standards.
Flight Centre said first quarter results indicate the company is tracking in line with the same period in the 2014 financial year after solid starts in the UK, South Africa and Singapore,
“While we are experiencing some volatility in Australia, our international businesses are generally performing well,” Flight Centre’s managing director Mr Graham Turner said.
Australian first quarter sales increased by 3% to 4% compared to the previous first quarter.
But this was at a slower rate than the company’s overall sales growth rate of around 7%.
“This slower-than-normal sales growth and an increased cost base means that Australian profits are currently down slightly on the prior year,” Mr Turner told the meeting.
Mr Turner said a change in consultant wage structures had contributed to extra costs.
FLT YTD – Flight Centre sees slower growth
Speaking at yesterday’s annual meeting in Brisbane, Mr Turner cautioned that reaching the targets for this financial year would not be a formality because first-half growth was likely to be flat.
"In Australia, we expect a gradual recovery in demand and consumer confidence as the financial year progresses, which will hopefully lead to accelerated second-half growth," he told shareholders.
"Of course, we cannot guarantee this recovery will eventuate and, while sales are growing modestly in both leisure and corporate travel, we are yet to see significant improvement."
He rejected suggestions a weaker Aussie dollar has led to slower growth in the number of Australians travelling abroad for holidays in recent months.
And Mr Turner said that despite growing concerns about Ebola, the company was doubtful the outbreak of the disease in parts of west Africa has had a “meaningful impact” on travel, partly because the areas where it has spread are not major tourist destinations.
Flight Centre said it was on track to achieve its forecast for an underlying profit before tax of between $395 million and $405 million this financial year, a 5% to 8% rise on 2013-14.
Flight Centre shares ended down 2.7% to $42.31.
