The Flight Centre (ASX: FLT) share price is down 4% after providing some guidance on its FY20 profit outlook.
Flight Centre is one of the world’s largest travel agencies and has company-owned operations in more than 23 countries, while its corporate travel management network spans more than 90 countries. The Group employs more than 19,000 people and owns 2,800 businesses.
Flight Centre’s Trading Update And FY20 Outlook
Flight Centre is holding its annual general meeting (AGM) today and gave a trading update & profit guidance.
Trading Update
Flight Centre said that the first four months of FY20 have been a challenging period with continuing issues and disruptions.
Profit to 31 October 2019 was “well down” in comparison to the prior corresponding period, although total transaction value (TTV) growth has been “fairly strong”.
First quarter TTV increased 11.4% globally for Flight Centre with Corporate TTV increasing by 18%. Corporate brands represented about 40% of the group’s first quarter TTV.
The company boasted that it is rapidly gaining share in the world’s largest corporate markets with 27.6% growth in the Americas, 36.2% growth in Europe, the Middle East and Asia (although this includes the 3Mundi acquisition) and 11.6% growth in Asia.
However, growth in the leisure segment was lower at 4.5% globally.
Some of the issues that Flight Centre has been from: continuing disruption in the Australian leisure business, a significant downturn in travel to the Dominican Republic (a large market for US and Canadian customers), ongoing Brexit uncertainty and unrest in Hong Kong.
Flight Centre is expecting revenue margin to again decrease this year due to business mix changes.
Profit Guidance
Profit before tax for the half year is likely to be below the $140.4 million underlying first half result achieved in FY19. Profit before tax is likely to be between $90 million to $110 million.
The company is targeting full year underlying profit before tax of $310 million to $350 million. The mid point of this range of $330 million would be a 3.8% decrease, whilst the top end would be 2% growth.
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