Flight Centre (FLT) shares held up solidly in yesterday’s mostly weaker trading session after it reaffirmed its full-year profit guidance in the wake of a 3.4% rise in interim earnings for the December half year.
The shares edged up, then down to end the day off half a per cent at $40.28 on news of the underlying pretax interim profit to $145.9 million which was made in what directors said were “challenging trading conditions”.
Directors of WorleyParsons made similar comments in their profit announcement yesterday about trading in the oil and resource sectors.
“Overall, we have started the year reasonably, given the conditions and the investments we have made,” Flight Centre managing director Graham Turner said in yesterday’s release.
These the challenge of trading in these conditions and the cautious outlook, the board lifted interim dividend 9.1% to 60 cents a share, against 55 cents a share a year ago.
On an after tax basis, earnings rose more than 16% to $116.7 million, which was quite a solid effort.
FLT 1Y – Flight Centre cautious as profit soars
Flight Centre said the value of all transactions in the half year rose 12.8% to a record $9.2 billion, including a 7% rise in Australia, but net margins eased a point to 1.6% from 1.7% a year ago.
Directors reaffirmed full-year guidance for underlying profit before tax of between $380 million and $395 million, a rise of between 4% and 8% for the year to June.
"While we will be disappointed if we do not achieve our goal, establishing a new profit milestone will not be a formality given our size, the strategic investments we are making and the volatile conditions in some geographies heading into our peak booking months," Mr Turner said.
“Consumer confidence in Australia has not yet recovered from the cyclical downturn late in the 2014 fiscal year and outbound travel from Australia has grown at a slower rate than normal.
"There have, however, been some positive signs recently with record sales and attendance at the annual Travel Expos that have been held throughout Australia and some of the cheapest fares in recent memory being advertised,” he said.
Flight Centre shares have risen 15% in the last year, compared with a 15.7% drop in the ASX 200 – that’s despite the fall in the value of the Aussie dollar which has driven more Australians back onshore from offshore travel.
