Flight Centre flags big profit hit from coronavirus

Flight Centre has cut its full-year profit guidance by 22 per cent, to between $240 million and $300 million, as the coronavirus outbreak crushes travel demand globally.

The travel booking group also cut its interim dividend after delivering a weak set of half-year results on Thursday.

Flight Centre chief executive Graham Turner said the coronavirus was providing the company with a lot of challenges.Credit:Photo: Glenn Hunt

Flight Centre said that the health crisis has hit both its leisure and corporate travel businesses and expected the “subdued activity” to continue through to the end of June.

“It is, of course, an evolving situation and we will continue to monitor developments,” Flight Centre chief executive Graham Turner said.

Like most travel and airline stocks, Flight Centre’s shares have been hammered since the virus outbreak, trading 20 per cent lower since the start of January.

Flight Centre on Thursday reported a net profit after tax of $22 million, down from $62 million in the same half last year.

Underlying profit was 20 per cent lower, due to “underperformance” in some leisure operations, cost growth and acquisitions, and growth in its low-margin foreign exchange and online leisure businesses.

The group declared a half-year dividend of 40 cents per share, down from 60 cents in the same half last year.

Mr Turner said the company was able to deliver record sales despite trading in "reasonably challenging" conditions globally.

“Unfortunately, we were unable to fully benefit from this accelerated leisure and corporate (transaction) growth," he said.

“Within our business, we have continued to proactively address internal factors that have impacted profit growth recently and have also initiated strategies to deliver further market-share growth and greater efficiency in the future."

At 11am Flight Centre's shares were trading flat at $35.

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