Travel agent Flight Centre (ASX:FLT) has upgraded its profit guidance yet again, and expects to generate a record profit.
After guiding to a profit before tax of between $325 to $340 million, Flight Centre now expects underlying profit for 2013 to come in between $338 to $342 million, following strong sales in May and June. That figure could be boosted, with the company also expected to report an additional $6 million in gains from its small portfolio of company-owned head office properties.
Flight had originally targeted a profit before tax of between $305 to $315 million, representing 5 to 8.5% growth over the prior year. A profit of $340 million would represent 17% growth on the record $290 million profit before tax achieved in the 2012 financial year.
"When we upgraded our initial guidance in early May, we reported that our 10 countries were profitable and that several were on track for record results," CEO, Graham Turner said. While Australia and the UK are Flight's major profit drivers, Greater China, Singapore and the USA are all expected to post strong results.
Flight Centre's corporate travel business in the USA continues to outperform the leisure and wholesale businesses, and is now the country's largest individual operation. The company has offices in 15 US cities and is set to expand into another four in the medium-term.
The company continues to defy the 'webification' of the travel industry, and has an integrated platform of online, mobile and physical stores. Flight's business model was expected to come under pressure from competitors including Corporate Travel Management (ASX:CTD), Webjet Limited (ASX:WEB), Wotif.com Holdings (ASX:WTF) as well as direct competition from the airlines. So far, Flight Centre has thrived and continued to deliver growth in revenues and profits.
Foolish takeaway
More shops and products are being rolled out, to continue delivering growth. Currently trading on a prospective P/E ratio of 15.2, Flight Centre doesn't appear expensive, and could be one for the watchlist.
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Motley Fool writer/analyst Mike King owns shares in Flight Centre.
