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Australia's Flight Centre issues new profit warning, shares fall
[SYDNEY] Australia's biggest listed travel agent Flight Centre Travel Group Ltd warned first-half underlying profit could fall nearly a third, sending its shares lower and underscoring the effects of a host of geopolitical events on tourism.
The downgrade builds on gloomy trading updates from the country's two top airlines, Qantas Airways Ltd and Virgin Australia Holdings Ltd, which said this week they are experiencing intense competition for international fares due to soft demand.
In a sharemarket filing on Friday, Flight Centre said it expected underlying pre-tax profit between A$105 million (US$81 million) and A$120 million for the six months to end-December, down from A$145.9 million the prior year. In August, the company said it hoped to grow underlying profit in fiscal 2017.
Its shares fell as much as 13 per cent, their biggest one-day drop since June 2015, and hitting a 14-month intraday low. "Internal and external factors that are currently impacting top and bottom-line results mean that we will not be tracking at those levels by the end of the first half," managing director Graham Turner said in the statement.
As he did in August, Turner again blamed subdued tourism demand in Britain following its surprise vote to leave the European Union, and in the United States ahead of the presidential election.
Flight Centre added that it expected trading conditions to improve in the second half, and to be able to report underlying pre-tax profit of between A$320 million and A$355 million for the full year, compared with A$352.4 million for the previous year.