Flight Centre profit hit

FLIGHT Centre has slashed its full-year profit guidance amid the worsening impact of the coronavirus outbreak on the travel sector and as its firsthalf profit plunged.

The flight retailer reported a first-half statutory profit after tax of $22.1 million, a 74 per cent dive after writedowns following the collapse of Thomas Cook, Cox & Kings and other smaller travel operators.

Revenue for the six months to December 31 grew 5.8 per cent to $1.55 billion.

The Brisbane-headquartered firm says it now expects full-year profit before tax to be $240 million to $300 million, down from its previous forecast range of $310 million$350 million.

Flight Centre said it would continue to monitor the coronavirus’s 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 affected by the Chinese inbound and outbound travel shutdowns.

The firm said its other corporate businesses had also been significantly impacted, particularly during the past three weeks, as companies worldwide amended travel policies to prevent employees from travelling to China and, in some cases, business travel short term.

“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 comes on the back of a difficult first half.

Its net profit decline reflected a $46.1 million impairment other hubs major in the charge relating to goodwill at its London-based Global Touring Business, $7.1 million in non-recurring costs for reaccommodating customers after 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 million non-cash accounting adjustment.

Flight Centre shares closed down 2 per cent at $34.30.