But the global company said yesterday that even though it had missed its target, shareholders could look forward to a return to “healthy” profit growth in 2005-06.
Flight Centre said full-year pre-tax profit should be between $106 million and $109 million, down 10 to 12 per cent on its target of $121 million.
Just four months ago, the company predicted annual profit growth would be flat on the previous year. But it has been posting profit warnings since January.
Managing director Graham Turner said profitability had been hurt as Flight Centre spent up on expanding its overseas operations.
Although sales continued to grow at 10 to 12 per cent a year, he said, ongoing investment and other costs had weighed on earnings.
“This has been a difficult year, characterised by consolidation, significant structural change and investment in strategies that will allow us to maintain our competitive edge in the future,” he said. “While we have been disappointed with our profit results, we are developing a strong overall business for the years ahead.”
Advertisement
AdvertisementFlight Centre’s shares fell as much as $1.54 before settling at $14.10, down 70c. The stock has been on a descent since January 13 – from $18.86 – after Flight Centre said first-half earnings would be down 8 to 10 per cent.
Mr Turner said the second half would also be below expectations due to redundancy expenses, asset write-offs and provisioning related to the acquisition of ITG Ltd.
However, chief executive Shane Flynn said the company’s business improvement program, called “Full Throttle”, would help deliver returns to investors in coming years.
“Full Throttle” emphasises a return to a leaner operating structure, and is expected to deliver $15 million in pre-tax savings in 2005-06 and up to $60 million by the end of 2007-08.
Flight Centre, which operates in Australia, New Zealand, South Africa, Hong Kong Canada, the US and UK, reports its annual results on August 18.
Be the first to comment