Flight Centre blames profit warning on election, Brexit fears

Monday, 23 May 2016 13:49:16 | Thuy Ong

Flight Centre says underlying profit before tax will be 2 to 5 per cent lower (Flickr: David Jackmanson)

Flight Centre has issued a profit warning for the 2015/2016 financial year, hit by geopolitical uncertainty including the Australian Federal election in July, the Brexit referendum next month and the Zika virus affecting travel to South America.

In a trading update to the ASX, Flight Centre said its trading results for the 10 months to April 2016, and preliminary estimates for May and June, mean underlying profit before tax will be 2 to 5 per cent below the $366.3 million recorded in 2014/2015.

"While we are disappointed to miss the short-term profit target we set in August last year, we are investing significantly in our future and in the strategies that will underpin our longer term growth," said Flight Centre managing director Graham Turner in a statement.

"We are experiencing some uncertainty heading into the final six weeks of the year and during what is traditionally our busiest sales period, which makes it difficult to forecast final results."

Flight Centre said US its leisure and wholesale arms have not met expectations, and higher airfare competition in Australia, the UK, the US and India have hampered some supplier targets.

In the UK, Flight Centre said its earnings have been "adversely affected" by investments made in new wage systems and product ranges, but overall profit in Australia would be in line with last year.

In February, Flight Centre posted an interim profit jump of 16 per cent to $116.7 million on the back of record global sales.

Flight Centre is due to release its full year results on August 25.

The company's shares were down 8.4 per cent to $33.76 near the market close at 3:48pm (AEST).

AustraliaPlus

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Flight Centre blames profit warning on election, Brexit fears

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