The Flight Centre Travel Group Ltd (ASX: FLT) share price is under pressure on Wednesday afternoon.
At the time of writing, the travel agent's shares are down 3% to $20.73.
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Why is the Flight Centre share price falling?
There are a couple of potential reasons for the weakness in the Flight Centre share price.
One is concerns over consumer spending, which is weighing on a number of shares. The other potential catalyst is the release of the company's investor strategy update today.
That strategy update included a trading update for both its overall business and the recently acquired Scott Dunn business.
Trading update
The good news is that Flight Centre is continuing to perform in line with expectations in FY 2023. The bad news is that if you were hoping for another upgrade, it looks unlikely to be coming.
With just over a week left to go in FY 2023, management has reiterated its guidance for $270 million to $290 million in underlying EBITDA for the year. This includes a contribution from the Scott Dunn business.
Nevertheless, this will be a massive improvement on FY 2022's underlying loss of $183.1 million.
Management advised that the market recovery continues, with demand rebounding and trading conditions gradually starting to normalise.
'No obvious signs of slowdown'
Pleasingly, the company has seen "no obvious signs of slowdown flowing from macro-economic changes."
Furthermore, the global corporate business is outpacing the industry recovery, delivering record total transaction value (TTV) during FY 2023 despite client activity only tracking at 70-80% of pre-COVID levels.
Management also confirmed that the Leisure sector recovery is gaining momentum during the seasonally busier second half. Australian leisure TTV was tracking broadly in line with pre-COVID levels in May. Though, this hints at a softening, given that it was ahead of pre-COVID levels in March.
Looking ahead, the company continues to target a 2% underlying group-wide profit before-tax margin by FY25. This improvement is expected to be driven by a combination of revenue margin increases and further cost margin decreases.
Finally, the company advised that the Scott Dunn business' contribution is tracking in line with expectations in FY 2023. In addition, its "integration [is] progressing in line with expectations, with expected benefits realised."
All in all, things are coming along nicely for Flight Centre, but it seems that some investors were expecting an even stronger performance and are concerned about the softening Leisure TTV.
