Shares in Flight Centre have dropped after the travel group warned it may struggle to reach its annual profit growth target.
Flight Centre in August forecast a five to eight per cent rise in underlying pre-tax profit to between $395 million and $405 million.
Flight Centre MD, Graham Turner, said achieving that target would “not be a formality”.
He said first half profit growth for 2014/15 was likely to be subdued, with the result expected to be broadly in line with the corresponding period last year.
Shares in Flight Centre fell by more than three per cent in early trade.
The stock was 73 cents, or 1.7 per cent, lower at $42.74 at 1054 AEDT.
Flight Centre said first quarter results indicate the company is tracking in line with the same period in the 2014 financial year after the UK, South Africa and Singapore started 2014/15 solidly.
“While we are experiencing some volatility in Australia, our international businesses are generally performing well,” Turner said.
Australian first quarter sales increased three to four per cent compared to the previous first quarter.
But this was at a slower rate than the company’s overall growth rate of around seven per cent.
“This slower than normal sales growth and an increased cost base means that Australian profits are currently down slightly on the prior year,” he said.
Turner said a change in consultant wage structures had contributed to extra costs.
The company is yet to see a dramatic bottom-line improvement in Canada but the US’ first quarter losses were significantly lower than last year thanks to a stronger performance in the corporate travel sector.
Flight Centre expects to expand its global sales staff by five to seven per cent this year as it pursues acquisitions to to grow its network.
Turner added that the company did not believe a recent devaluation in the Australian dollar was responsible for slower growth in Australian outbound departures.
He said that at this stage the Ebola epidemic was not having a meaningful impact on travel as the affected parts of West Africa were not mainstream tourist destinations.
“This contrasts to SARS more than a decade ago, when parts of Asia and Canada were affected and it was feared that it would quickly spread to other regions and countries,” he said.
AAP
