Flight Centre share price sinks on another profit warning

Flight Centre is facing rising costs and margin pressure. In particualr staff costs are rising on the back of well publicised pressure.

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The Flight Centre Travel Group Ltd (ASX: FLT) share price neared a 52-week low today after the travel group told investors profit before tax for the six months to December 31 2019 is now expected to come in between $90 million to $110 million. This compares to the $140 million delivered in the prior corresponding half-year period.

It is still 'targeting' profit before tax between $310 million to $350 million for the full year, which compares to the $343.1 million in fiscal 2019. However the 'targeted' result excludes up to $17 million in one-off costs to be taken over the year related to a collapsed travel group and development costs around its Upside investment. 

Total transaction value was actually up 11% over the September quarter, however, margins are suffering on the back of higher costs. In particular higher staff costs with Flight Centre recently in the news over staff costs for the wrong reasons. 

Yesterday, Corporate Travel Management Ltd (ASX: CTD) delivered a much brighter trading update with its stock up around 10% over the last two trading sessions. 

Motley Fool contributor Tom Richardson owns shares of Corporate Travel Management Limited.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Flight Centre Travel Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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