Travel agency giant Flight Centre has cut its full-year profit guidance by 22% and interim dividend by a third, thanks to the growing uncertainty caused by the coronavirus outbreak that is now stretching around the globe.
Full-year guidance has now been set at between $240 million and $300 million.
That’s down from the previous guidance of $310 to $350 million and $343.1 million reported for 2018-19.
Flight Centre on Thursday reported a net profit after tax of $22 million, down from $62 million in the same half last year.
Underlying profit was 20% lower, due to “underperformance” in some leisure operations, cost growth and acquisitions, and growth in its low-margin foreign exchange and online leisure businesses.
The company slashed its interim dividend to 20 cents a share from 60 cents after revealing a weak set of half-year results on Thursday.
The weak results had been expected with the company issuing two updates in the past few months that made it clear the group was not performing as strongly as thought back in August when the 2018-19 results were released.
The COVID-19 crisis has hit both its leisure and corporate travel businesses and the company now expects “subdued activity” through to the end of June (and no doubt beyond, though management held out hope for rapid recovery if the crisis is short term in nature).
“It is, of course, an evolving situation and we will continue to monitor developments,” Flight Centre CEO Graham Turner said.
Like other travel and airline stocks, Flight Centre’s shares have been hammered since the virus outbreak, down 20% lower since the start of January.
That’s why the shares only fell 2% to $34.28 yesterday.
