Bettors headed for the exit door at Flight Centre after he quietly dropped record revenue forecasts into the memory hole and sent impending earnings hits to the last page.
In a stock exchange announcement that sweetened the sour stuff, the Brisbane-based travel agency said its total transaction value had increased by about $1.7 billion to about $23.7 billion in 2023-24.
After Flight Centre said the figure was in line with the group’s “record” turnover in 2018-19, chief executive Graham Turner said the group was doing so with around a third fewer workers and an expanding independent network.
“This underscores the positive return we are starting to see on investments made during the pandemic to create more productive and efficient businesses,” Mr Turner said.
But its ASX announcement, filed before the exchange opened on Wednesday, did not mention Flight Centre’s May forecast that its total turnover for 2023-24 was “expected to exceed” $23.7 billion.
While Flight Centre said its metric, called “core profit before taxes,” would remain comfortably above $300 million, it reserved a net loss of $82 million to $95 million for a table at the end of the three-page disclosure.
The new hits included a $45 million to $49 million write-down from StudentUniverse’s business restructuring and a total of $29 million to $33 million in trading losses and closing costs for Discova Americas and GoGo US’ wholesale operations.
Traders were quick to see the bad news, with shares falling more than 6 percent in early trading before recovering slightly to close down 4.2 percent, or 97 cents, at $22.02.
Like many publicly traded companies, Flight Centre prefers to focus on internally designed measures that are quite different from statutory revenue and profit figures.
As a travel agency that generally collects commissions on sales, it claims that total transaction value is a more important measure of performance than traditional revenue.
The company says its core earnings figures, adjusted to exclude the impact of various non-recurring items, provide a “truer reflection of the company’s underlying performance and earnings figures.”
Flight Centre reported a statutory profit of $120 million for the six months to December 31 on total revenue of $1.29 billion. Using its internal figures, the company reported a total transaction value of $11.3 billion and an underlying profit before tax of $106 million.
The company expects a significant increase in core pre-tax earnings in the second half of the year, with a result in the range of $300 million to $340 million.
It cut that figure to between $316 million and $324 million in an announcement on Wednesday.
Although airfares in Australia fell by 13% in the first half of June, the airline managed to increase ticket volumes by 10%.
The announcement Wednesday was intended to narrow earnings guidance and provide a “one-time update on results ahead of the reporting season,” a spokesman for the Aviation Center said.
The company had previously predicted all of its hit songs except for Student Universe and Discova.
“There is certainly no intention to hide anything,” the spokesman added.
