Flight Centre has upgraded its profit guidance as its Australian, UK and Dubai units posted strong growth and a strong local currency increased outbound travel.
The travel agency group said on Tuesday profit before tax (PBT) for the first seven months of 2011/12 was “in the order of 20-22 per cent higher” than during the prior corresponding period.
Net profit for the six months to December 31 came in at $81.6 million, up 15.7 per cent from the prior corresponding period.
The trading performance so far in the second half prompted the company to lift its expectations for full year PBT to between $270 million and $290 million.
This would represent a 10 to 18 per cent improvement of PBT of $245 million in 2010/11, up from previous forecasts of an eight to 12 per cent lift.
IG Markets strategist Stan Shamu said Flight Centre was one of the best performing stocks on Tuesday after the company surprised the market with its upgraded earnings guidance.
Flight Centre closed up 84 cents, or 4.05 per cent, at $21.57.
Managing director Graham Turner said management was reasonably confident the guidance would be met if economic conditions remained stable.
However, he cautioned that the industry was not that predictable.
“We only need another ash cloud or a few Qantas groundings and that sort of thing and it could easily come back to a small six-month growth,” Mr Turner said.
Sales from airline and accommodation bookings, rose nine per cent to $6.18 billion, Flight Centre said, as the stronger Australian dollar and cheap international airfares caused more Australians to head overseas.
The travel agency group operated in 10 countries and reported improved earnings before interest and tax (EBIT) in nine, with growth strongest in Australia, the UK and Dubai.
The New Zealand unit suffered a slight EBIT decline, while EBIT losses in the US narrowed to $3.3 million, from $7 million in the prior corresponding period.
Flight Centre said the grounding of Air Australia after the airline entered voluntary administration was expected to cost the company up to $1 million.
The company declared a fully franked interim dividend of 41 cents per share.
