Flight Cente’s first half net profit fell -9.5% to $100m despite the travel retailer posting record sales of $8.14bn, an increase of 8.8% for the six months to December 31, 2014.
The main reason for the profit drop was “subdued trading conditions” in its core Australian business, where earnings before interest and tax fell -10% year on year.
This scenario led to discounting by consultants to close sales, eroding income margins to 13.6%.
However, other Flight Centre markets performed strongly.
“In sales terms each of our 10 operations achieved record results,” MD Graham Turner said.
“Four business – the United Kingdom, South Africa, Singapore and Greater China – delivered record first half EBIT, while the USA achieved its best first half result since we acquired the Liberty and GOGO businesses in 2008.”
The UK was Flight Centre’s most profitable market outside Australia, generating $19.8m before tax profit, with the corporate businesses performing particularly well.
Flight Centre is maintaining full year profit guidance of $360m to $390m before tax and sees “opportunities for accelerated second half growth and some early signs of recovery in Australia.”