The Flight Centre Travel Group Ltd (ASX: FLT) share price is taking a beating today.
Shares in the S&P/ASX 200 Index (ASX: XJO) travel stock closed yesterday trading for $21.62. In morning trade on Friday, shares are changing hands for $18.05 apiece, down 16.5%.
For some context the ASX 200 is down 0.4% at this same time.
This sharp underperformance comes after Flight Centre released an operational review and trading update for FY 2025 at the Morgan's Conference.
Flight Centre share price tumbles on uncertain growth outlook
ASX 200 investors are selling down the Flight Centre share price despite the company highlighting the efficiency and productivity improvements achieved since the global pandemic.
In FY 2019, Flight Centre had a revenue margin of 12.9%, which improved to 11.4% in FY 2024. On the cost front, the underlying cost margin dropped from 10.9% in FY 2019 to 9.6% in FY 2024.
Management credited the margin improvement to business mix changes (growth in corporate and lower margin leisure businesses) and commission cuts from some airlines during the pandemic.
The cost margin improvement was said to reflect structural changes made during the pandemic along with economies of scale.
FY 2024 also saw Flight Centre achieve record operating cash inflow of $421 million and a record Total Transaction Value Record (TTV), which the company said was delivered with less than 90% of its traditional cost base.
The company also noted that it now has a heavier second-half "earnings skew", with almost two-thirds of FY 2024 underlying profit before tax generated in the latter six months of the financial year.
Looking ahead into FY 2025, management expects profits will again be heavily weighted to the second half. The ASX 200 travel stock will provide market guidance at its AGM on 14 November.
The Flight Centre share price looks to be catching headwinds as the company expressed a fair amount of uncertainty over the year ahead.
While trading was said to be "marginally above" FY 2024 Q1 in terms of TTV, profit margin and underlying profit, the company said it was "currently too early to draw conclusions as to likely trading patterns over full year".
While there are similar trends in the early months of FY 2025 to the late months of FY 2024, there was "some inconsistency month-to-month".
Management said they are currently expecting normal industry growth over the full year, with 4% to 5% growth in Australian outbound travel. Declining airline ticket prices remain in focus.
The company aims for a 2% underlying profit before tax margin in FY 2025, and overall profit growth is its main priority.
How has the ASX 200 travel stock been travelling?
With today's intraday fall factored in, the Flight Centre share price is right back where it was this time last year.
