Slowing leisure demand in Australia hit Flight Centre's profit. Photo / Supplied
Slowing leisure demand in Australia hit Flight Centre's profit. Photo / Supplied
A slowdown in holiday bookings in Australia has led to a fall in half-year profits for Flight Centre, but its New Zealand arm says its profit is up almost 65 per cent.
Flight Centre Group's net profit after tax dropped by nearly 17 per cent to A$85 million ($89m)for the six months to December 31.
The company said it was likely its underlying profit before tax for the full-year would be at the bottom of its previous guidance range of $390m-$420m.
It says it is closely monitoring Australian leisure results amid ongoing earnings and market volatility. In spite of the profit dip, the company will return $211m to shareholders in a special dividend.
While there had been ''disappointing'' Australian leisure results, corporate business across the Tasman and in other countries was driving growth.
There were accelerated sales and profits throughout the business outside Australia.
Flight Centre does not break out figures for its New Zealand business, but combined with Australia it has turnover of A$6 billion. The firm says that in this country its turnover for the six months was a record.
While the outlook for the group is at the lower end of guidance, the outlook for full-year results in this country looked positive, tracking towards a third successive year of record profit.
David Coombes, Flight Centre NZ managing director, said in an increasingly increasingly competitive market, this was evidence of "our powerful network and strong, customer focused travel offering".
''I couldn't be prouder of these results, and attribute them first and foremost to our people; it's thanks to their continued passion and specialised travel expertise that we consistently deliver results above market average.''
While store closures in Australia had affected the result, the number of Flight Centre outlets in this country had remained steady at 125 and the company also had 10 Travel Associates stores.
Coombes said the business had looked closely at the needs of customers in smaller regional communities.
It had made changes to create "a more sustainable model that allowed us to maintain our physical stores in regional NZ".
''This new model has proven extremely successful, with all of the stores involved in the programme now within our top 10 most improved stores nationwide,'' he said.
More flexible work hours were providing benefits.
''I am particularly proud of how we have overcome preconceived notions about rigid working hours in our retail bricks and mortar space. We're proving that being open to different team structures and hours can work, and in turn have outstanding results.''
Last year the firm's Cruiseabout stores were brought into the Flight Centre brand.
''The cruise industry is growing at a phenomenal rate and this move meant we were able to provide our customers a more tailored and specialised offering," said Coombes. "This strategy has proven extremely successful with total cruise sales increasing year on year.''
Flight Centre NZ managing director David Coombes. Photo / Greg Bowker
In this country, margin and productivity gains for corporate travel in the first half of this financial year had driven profit growth of 45 per cent.
Competitior Helloworld last week reported a lift in profit of 5.4 per cent to $A21.9m, while privately owned House of Travel says turnover is hitting records and is over $2b.
Flight Centre said in its group results that it will consider further mergers and acquistion opportunities to complement orgainc growth.
It said it would build a stronger network by closing or relocating poorly performing or poorly located shops and opening new ones in prime locations.
