Flight Centre (FLT) shares leapt 15% at one stage yesterday after reporting expectations of an improved performance in 2015-16.
The company told the ASX yesterday that it had earned a 3.4% rise in underlying profit before tax to $363.7 million, in line with its latest earnings guidance.
But it forecast that the same figure could be up by between 4% and 8% in the current financial year.
But pleased the market by forecasting its earnings will grow by 4% to 8% in the current financial year, or between $380 million and $395 million. The market had been looking for a figure of $374 million.
The company’s shares jumped 8% in early trading, then 10%, and finally 15%, before a small pullback which saw them trade to the close of $36.01. That was a gain of 11.5% for the day.
While 2014-15’s result was the second best in the company’s history, it was impacted by a market slowdown in Australia, where outbound travel growth slowed to just on 3% more than half 2013-14’s 7% growth.
But while the outlook is improved, Flight Centre’s board is not going overboard, holding the final fully franked dividend at an unchanged 97 cents a share. The interim was an unchanged 55 cents a share, making a steady $1.52 a share for the year.
"Overall, Flight Centre has started the new year reasonably and, based on year-to-date trading results, is currently tracking broadly in line with its annual profit before tax growth target," managing director Graham Turner said.
"In Australia, consumer confidence remains relatively subdued but we are seeing positive momentum in leisure travel, with customer enquiry currently tracking above target and sales in key sectors continuing to grow. Gross margins in Flight Centre brand have also rebounded and we have started to see some improvement in the niche leisure brands,” Mr Turner said in yesterday’s statement.
In June, Flight Centre triggered a sell-off in its shares by warning that underlying profit before tax would be between $355 million and $365 million, the midpoint of which had been the bottom of its prior guidance range.
The shares plunged by more than a quarter as a result, and were kept under pressure as the value of the Aussie dollar fell and investors believed the company’s growth would be crimped as a result.
