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The Flight Centre Travel Group Ltd (ASX:FLT) is grappling with a notable decline in its share price today (24 July 2024), reflecting investor reaction to amended profit guidance for the 2024 financial year (FY 2024). Closing at AUAU$23.01 yesterday, shares have plummeted to AUAU$21.04 in early trading on Wednesday, marking an 8.6% downturn amid broader ASX 200 Index (ASX:XJO) losses of 0.3%.
Flight Centre's revised forecast now anticipates a pre-tax profit (PBT) between AU$316 million and AU$324 million for FY 2024. This adjustment excludes approximately AU$4 million in trading losses attributed to the closure of Discova Central Americas (DCA), a strategic move by Flight Centre amidst ongoing operational reviews. Initially, the guidance range would have spanned AU$304 million to AU$344 million PBT if not for the DCA losses.
Moreover, Flight Centre projects a total transaction value (TTV) of approximately AU$23.7 billion for FY 2024, marking an AU$1.7 billion increase from the previous fiscal year and aligning closely with its record FY 2019 results, despite significant airfare deflation.
The company forecasts an underlying profit margin of 1.3% to 1.4%, an improvement from 0.6% in the preceding year, reflecting strategic adjustments and operational efficiencies implemented throughout FY 2024.
Graham Turner, Flight Centre's managing director, acknowledged the challenging market conditions but highlighted solid TTV growth driven by consumer prioritisation of travel spending amid economic uncertainties. Turner noted that while TTV growth rates were tempered by the closure of the Indian wholesale foreign exchange business and airfare price deflation in the latter half of the year, the deflationary trend could potentially bolster demand for international travel in the coming months.
Regarding operational improvements, Turner expressed optimism about ongoing initiatives aimed at enhancing productivity and service delivery within Flight Centre's corporate business segment. He emphasized the company's strategic investments throughout FY 2024, anticipating favorable outcomes in the near term.
Flight Centre is scheduled to release its full FY 2024 financial results on 28 August, providing stakeholders with a comprehensive overview of its performance and strategic outlook moving forward.
Despite today's significant intraday decline, Flight Centre's share price has managed to sustain a 3% increase year-to-date, underscoring investor confidence amidst evolving market dynamics and operational adjustments within the travel sector.
