Flight Centre profit dips amid challenging climate
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Flight Centre books a profit result in line with Morningstar's expectations as the travel agency makes multi-million-dollar enhancements to its network.
Flight Centre's (ASX: FLT) underlying net profit before one-off items for fiscal 2016 dipped 3.8 per cent to $246.7 million, the travel agency operator said on Thursday.
The result, which was broadly in line with Morningstar's expectations, was the third best profit in the company's history and was recorded amid a "challenging trading climate" and during a period of investment that has seen the company make multi-million-dollar enhancements to its network.
Statutory net profit for the year was down 4.7 per cent to $244.6 million, the company said in a statement to the ASX.
Flight Centre declared a fully franked $0.92 per share final dividend to be paid on 14 October 2016 to shareholders on record as of 16 September 2016.
This follows the $0.60 per share fully franked interim dividend and takes the full-year dividend to $1.52 per share, in line with fiscal 2015 and 3 cents above Morningstar's forecast.
Total transaction value (TTV) for the year was up 9.7 per cent to a record $19.3 billion, while income margin was 20 basis points higher at 13.8 per cent.
"The strong sales growth was particularly pleasing and meant that, on average, the group sold travel valued at more than $50 million every day of last year," Flight Centre managing director Graham Turner said.
"TTV increased in both leisure and corporate travel but was generally stronger in corporate as we turned over more than $6 billion globally and consolidated our position as one of the world's largest travel management companies."
Commenting on the trading environment at the start of fiscal 2017, Turner said conditions remain volatile in some markets, including the UK and the US.
In the UK, he said the Brexit vote has adversely affected consumer confidence and demand for both corporate and leisure travel, while in the US, airfares continue to fall as airlines discount fares to stimulate demand in a soft market.
Looking to the remainder of the year, Turner said it is too early to provide meaningful profit guidance, given the uncertain environment, low airfare yields and ongoing investments.
However, he said the company will be "disappointed" if it does not exceed its underlying fiscal 2016 profit results.
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Nicholas Grove is a Morningstar journalist.
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