Guess which ASX 200 stock is down 9% on FY25 earnings guidance miss

This travel agent giant has disappointed investors with its results.

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Bored woman waiting for her flight at the airport.

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Flight Centre Travel Group Ltd (ASX: FLT) shares are on the slide on Thursday.

In morning trade, the ASX 200 stock is down 9.5% to $11.66.

Why is this ASX 200 stock crashing?

Investors have been selling the travel agent giant's shares today following the release of an update on its full year results for FY 2025.

According to the release, the ASX 200 stock expects to deliver record total transaction value (TTV) of approximately $24.5 billion. This will be up 3.4% on the prior corresponding period.

However, taking a lot of the shine of this record performance has been Flight Centre's underlying profit before tax (UPBT), which has fallen short of guidance.

Flight Centre revealed that it is expecting to report UPBT between $285 million and $295 million in FY 2025. This is below its guidance range of $300 million to $335 million.

Management advised that this reflects a challenging fourth quarter caused by an underperformance and additional costs in Asia, together with the significant impacts of escalating tensions in the Middle East and the ongoing global downturn in bookings to the United States.

It notes that this volatility temporarily disrupted traditional travel and booking patterns during the ASX 200 stock's peak trading period as some customers either booked closer-to-home overseas holidays or delayed finalising travel plans. As a result, Flight Centre's Leisure FY 2025 UPBT is expected to dip below its strong FY 2024 result.

In addition, the company's Corporate UPBT is expected to be below FY 2024. This is despite the business performing solidly and delivering year-on-year profit growth outside of Asia and record TTV. Management has blamed a flat global market and widespread client downtrading during the period.

Strategic response

The ASX 200 stock revealed that targeted measures are in place to address short-term market volatility, while positioning it for accelerated profit growth as conditions normalise.

This includes cost optimisation measures. For example, Flight Centre is fast-tracking initiatives in the new Global Business Services (GBS) area to enhance operational efficiency and lower costs, while continuing to focus on productivity gains and cost reduction group wide.

Management is also focusing on portfolio refinement and a 15% to 20% capital expenditure reduction for FY 2026.

Commenting on the update, the ASX 200 stock's managing director, Graham Turner, said:

FY25 has proven to be volatile year for our industry, with geopolitical unrest and macroeconomic concerns slowing the strong post-COVID rebound. Within this challenging cycle, our diverse global brand network, which includes large-scale leisure and corporate businesses that capture a high percentage of recurring revenue from repeat and contracted customers, has again delivered record TTV – underlying the resilience of our global platform.

To boost future profits, we have implemented comprehensive strategies to enhance performance and capitalise on the substantial opportunities ahead. Our brand and business portfolio and strong balance sheet position us well for accelerated growth as market conditions stabilise, while the investments we are making in technology, CX and operational efficiency are set to drive competitive advantage and superior shareholder returns.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group. 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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