Corporate Travel Management (ASX: CTD) has stormed back into the black in FY22 with a bumper final three months of the year delivering higher trading volumes than the entire COVID-ravaged 2021 financial year.
Solid demand from corporate clients amid ongoing capacity constraints have combined with a strong retention rate of existing clients to deliver a $3.1 million bottom-line profit for the latest financial year – up from a $55.4 million loss in FY21. Underlying EBITDA surged to $59.8 million, compared to a $7.2 million loss the previous year.
However, it’s the June quarter that the company says sets the business up for solid growth in the current financial year with Corporate Travel Management declaring that its business recovered faster than the broader corporate travel market towards the end of FY22.
The company recorded total transaction value (TTV) of $5.07 billion in the latest year, up 215 per cent from $1.6 billion in FY21. The June quarter TTV alone was well ahead of the previous year’s total at $1.8 billion. This led to a 94 per cent increase in group revenue to $388.7 million in FY22.
Growth was aided by counter-cyclical acquisitions made by the group at the height of the pandemic, including the $175 million deal for Helloworld Travel’s (ASX: HLO) business and entertainment travel arm last year, and the $275 million buyout of US-based Travel & Transport a year earlier.
Corporate Travel management has plenty of capacity for future acquisitions on its balance sheet with $127 million in cash and zero debt at the end of June this year.
Managing director Jamie Pherous describes Corporate Travel Management as a ‘different business’ to the one before the pandemic hit.
“We are larger, more diverse and more relevant to our market globally,” says Pheros.
“This gives us an exciting platform from which to continue our organic growth trajectory in FY23 and beyond.”
Pheros says the rebound in business travel has been driven by a desire to return to ‘face-to-face connectivity in a post-COVID world’.
“Following the removal of most border and travel restrictions globally, the fourth-quarter momentum makes us optimistic for the future, and we are pleased that the business has successfully translated that momentum into earnings,” he says.
“Our results in FY22, and particularly in the fourth quarter, put us on a path to full recovery in the near-term.”
Corporate Travel Management boosted its team by 950 employees during the year as the company’s focus turns towards addressing the global shortage of travel industry workers.
The company experienced significant growth across all of its key markets, except for Asia.
Revenue in North America rose 127 per cent, in Europe it was up 100 per cent and in Australia and New Zealand 63 per cent. Revenue in Asia was down 8 per cent largely because of China’s zero-COVID approach affecting travel in the region.
Corporate Travel Management bolstered its Asian operations this year with the acquisition of Safe2Travel in Singapore and the establishment of a new office in Japan.
A survey of customers globally offers the company hope that a return to normalised travel conditions is getting nearer with 80 per cent of respondents saying they expect to travel as much or more in the coming year as they did before the pandemic hit.
Corporate Travel Management is expecting a full recovery of its business in FY24 while capacity constraints continue to hinder growth opportunities in the current year.
However, the company says it is confident of improved corporate travel demand in FY23 with China expected to progressively ease restrictions during the year.
Corporate Travel Management is paying a final dividend of 5c per share.
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