Flight Centre profit falls, its shares go nuts

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Shares in Flight Centre surged after the travel agent posted its annual results showing a 5.6% fall in net profit to $230.77 million.

A short time ago, the shares were up 10% to $48.91.

Revenue was up 1.3% to $2.68 billion for 2017 and the company is forecasting less airfare discounting ahead, helping boost revenue.

Founder and CEO Graham Turner says the company’s 2017 first quarter was subdued as a result of the US and Australian elections and the UK’s Brexit referendum.

On top of that, international air fares were significantly discounted in the first half.

“While these offers contributed to the strong ticket volume growth that FLT achieved in markets like Australia, the overall market growth rate (Australian outbound travel) of just over 4% was fairly subdued by historical standards, pointing to some ongoing consumer uncertainty,” he says.

“In terms of airfare pricing, FLT currently expects a more normal trading environment during FY18 in Australia, with modest decreases or increases in average fares, rather than steep declines across the board.”

He says the company started 2018 with solid momentum, which should lead to reasonable first quarter growth.

The company declared a fully franked dividend of 94 cents a share.

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