Flight Centre’s first-half profit has plunged 74 per cent on the back of writedowns following the collapse of Thomas Cook, Cox & Kings and other smaller travel operators.
The flight retailer reported a statutory profit after tax of $22.1 million, down from $85 million the year before.
Revenue for the six months to December 31 grew 5.8 per cent to $1.55 billion.
Flight Centre on Thursday lowered its full-year guidance following the emergence of the coronavirus outbreak that has rocked the whole sector.
The Brisbane-headquartered firm said it now expects its full-year profit before tax to be between $240 million and $300 million, down from its previous forecast range of $310 million-$350 million.
Flight Centre said it would continue to monitor the coronavirus’ impact on its corporate and leisure businesses in the upcoming months – traditionally the year’s peak booking periods.
As outlined in its February 7 update, the Greater China and Singapore corporate businesses – which together generate about 2.5 per cent of the group’s total transaction value – have been significantly impacted by the Chinese inbound and outbound travel shutdowns.
The firm said its other corporate businesses have also been significantly impacted, particularly during the past three weeks, as companies globally amend travel policies to prevent employees from travelling to China and, in some cases, other major business travel hubs in the short-term.
Flight Centre said leisure travel patterns are also being increasingly affected recently, with some customers reviewing short-term holiday plans and monitoring the virus’s possible spread to locations outside China and Asia in the future.
“It is impossible to predict the virus’s impact at this time, but Flight Centre expects it will lead to subdued activity through to the end of FY20,” the firm said.
The tepid outlook follows a tough first-half.
Its net profit decline reflected a $46.1 million impairment charge relating to goodwill at its London-based Global Touring Business, $7.1 in non-recurring costs for reaccommodating customers following the collapse of Tempo and Bentours in Australia and New Zealand, a $3.1 million charge in its Ignite business as well as a $2.1 non-cash accounting adjustment.
FLIGHT CENTRE H1 PROFIT PLUNGES
* Half-year net profit down 74pct to $22.1m
* Revenue up 5.8pct to $1.55b
* Fully-franked interim dividend 40 cents a share vs 60 cents year ago.