Flight Centre's new year has got off to a tough start, with the travel company facing airfare price wars, worries over Zika, the fallout from Brexit and American worries about terrorism in Europe.
Flight Centre on Thursday reported a 3.8 per cent fall in annual underlying profit and said soft trading conditions in the fourth quarter continued into the start of the 2016/17 financial year and were only just now picking up.
Britain's surprise decision to leave the European Union hit consumer confidence and demand across the corporate and leisure sectors in the UK, while airfares have been falling in the US as carriers try to offset the effect of worries over the Zika virus in South America and terror attacks in France and Belgium.
Managing director Graham Turner said it was "impossible to predict future conditions", but said management could see opportunities for growth in international markets.
"We will be disappointed if we don't improve on our FY16 performance," Mr Turner said in a statement.
The company will open new country-specific websites in Europe, Asia, the UAE and South Africa and increase its sales staff count by six to eight per cent.
The group's key measure of sales is expected to exceed $20 billion this year from $19.3 billion in 2015/16, but Flight Centre will provide an earnings update at its shareholder meeting in November once it has a clearer picture of the trading environment.
Flight Centre said it had a $429.9 million positive debt position and flagged the possibility of returning surplus cash to shareholders down the track, possibly by increasing its dividend payout ratio, a one-off return or a share buyback.
Flight Centre shares closed up 23 cents, or 0.64 per cent, at $36.23.
"Corporate commentary was perhaps a little stronger than expected and the capital management commentary, saying that surplus cash may be given to shareholders may also be a reason for the gain," Macquarie Securities analyst Sam Dobson said.
Underlying profit before tax fell to $352.4 million from $366.3 million a year earlier despite revenue rising 11.2 per cent.
FLIGHT CENTRE PROFIT FALLS
*Net profit down 4.7pct to $244.6m
*Revenue up 11.2pct to $2.7b
*Final dividend down five cents to 92 cents, fully franked
*Full-year dividend $1.52
