Flight Centre shares have dropped 12 per cent after Australia’s biggest travel agency slashed its full-year profit guidance due to a weaker than expected performance in the local leisure market.
The travel operator on Friday said subdued trading conditions in the Australian leisure market have reduced total transaction value in the lead-up to its key May-June trading period.
As a result, Flight Centre cut its pre-tax underlying profit guidance for the 12 months to June 30 by about 15 per cent, to between $335 million and $360 million, from the $390 million to $420 million it flagged in October.
The mid-point of the new guidance range is 10 per cent lower than last year’s record $384.7 million.
Flight Centre shares plummeted on the move, giving up $5.44, or 12.3 per cent, to sit at $38.73 by 1045 AEST.
Managing director Graham Turner said Flight Centre was addressing the challenges to its Australian business, which this year will generate less than half the company’s profit for the first time.
“While we expect Australian leisure results to improve as short-term operational improvement plans gain traction and as longer-term transformational strategies are implemented, we also expect these trends to continue,” Mr Turner said.
Mr Turner said global earnings will also be weighted more heavily towards corporate travel.