A doubling of transaction volumes in the first six months of FY23 has positioned Corporate Travel Management (ASX: CTD) to land a record full-year profit after the company declared it was ‘business as usual’ despite the problems plaguing air travel globally.
Corporate Travel Management posted a net profit of $15.93 million for the December half, up from a loss of $8.6 million a year earlier.
Underlying EBITDA surged 182 per cent to $51.3 million as the company boosted total transaction value (TTV) by 102 per cent to $4.2 billion, highlighting a resurgence of business travel in its key markets.
The first-half result has led Corporate Travel Management to provide guidance of record earnings for the full year with underlying EBITDA expected to land between $160 million and $180 million, while profit before tax is forecast to range from $120 million to $140 million.
The earnings targets position Corporate Travel Management to beat its pre-COVID result of FY19 as all of the company’s markets, including Asia, regain momentum.
The recovery in Asia stepped up after Hong Kong reopened to travel late in the first quarter, with almost half of the company’s profit for the region generated in the last two months of the December half.
Corporate Travel Management has declared the “last piece of the puzzle” for a full recovery dropped in place when China opened for travel on 8 January this year.
“As a result, the region is experiencing a stepped recovery into February, only limited by supply constraints in the region,” the company says.
The recovery in Asia was the biggest in percentage terms for the company with TTV jumping 477 per cent to $513.3 million, and underlying EBITDA bouncing back into the black for a $3.4 million profit.
The rebound in travel volumes in Australia and New Zealand were almost as great as those in Asia in percentage terms, charging 457 per cent higher to $1.33 billion. The EBITDA gain was the strongest of any region, surging 2,511 per cent to $23.5 million.
In North America, widely publicised schedule reliability issues and a “poor airport experience” led Corporate Travel Management to carry excess staff capacity to meet a recovery that the company says didn’t occur.
However, TTV in North America was still 51 per cent higher at $1.43 billion and underlying EBITDA surged 177 per cent to $16.6 million.
The company says the corporate travel recovery reignited in the region this year with January booking volumes at their highest levels since COVID.
“It was pleasing to deliver a record TTV and revenue result in 1H23, noting this half included an additional $8.4 million charge for excess staff capacity held to be ready for a further expected 2H23 recovery,” says Corporate Travel Management’s managing director Jamie Pherous.
“This is a one-off investment; thankfully, we are seeing strong momentum into 2H23 through significant new clients transacting and activity recovery. We expect to utilise this staff investment to service our customer growth imminently.”
Pherous says the company has largely rebuilt it workforce and continues to hold excess capacity to cater for expected growth. Corporate Travel Management added 204 full-time-equivalent jobs during the half year, pushing its workforce to more than 3,000.
Corporate Travel management is paying an interim unfranked dividend of 6c per share, compared with no dividend for the previous corresponding period.
Shares in CTM are down 2.61 per cent to $1.12 per share at 11.23am AEDT.
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