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Qantas shares drop after FY profit jumps

Qantas shares have dropped to their lowest in more than a month despite Australia's major carrier posting a record underlying profit of $1.6 billion.

The airline reported full-year net profit rose 15 per cent to $980 million, helped by strong performances from the domestic flying business of Qantas and Jetstar.

Chief executive Alan Joyce said the record profit reflected a strong market as well as the benefits of ongoing work to improve the business and build long-term shareholder value, but warned of challenges ahead.

"We're facing another increase to our fuel bill for 2018/19 and we're confident that we will substantially recover this through a range of capacity, revenue and cost efficiency measures, measures, in addition to our hedging program," he said in a statement.

By 1515 AEST, Qantas shares were down 21 cents, or 3.1 per cent, to $6.51.

The group's domestic flying division delivered earnings of $1.1 billion, a 25 per cent jump from the previous year, driven by efficiency gains and higher seat occupancy on its planes as the airline boosted premium offerings such as new lounges and free Wi-Fi, for passengers.

Qantas international division increased its earnings by seven per cent to $399 million.

The company has set aside a further $67 million for up to 27,000 non-executive employees with a bonus of $2,500 each.

"It brings the total amount set aside for non-executive employees to over $300 million over the past four years for their part in the Group's exceptional performance," Mr Joyce said.

Qantas didn't provide a specific guidance for 2018/19, but said its fuel bill is expected to jump by $690 million to $3.9 billion, while group expenditure would rise by around $250 million.

It expects transformation benefits of $400 million in the current financial year.

Qantas said it would return $500 million to its shareholders.

It declared a fully-franked final dividend of 10 cents per share, up 3.0 cents from a year earlier, as well as a fresh on-market share buyback of up to $332 million.

QANTAS POSTS RECORD UNDERLYING PROFIT

* Net profit up 15 per cent to $980 million

* Underlying profit before tax up 14 per cent to $1.6 billion

* Final dividend of 10cps vs 7.0cps year ago

Austrlaian Associated PressBack to Breaking News

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