Corporate Travel Management (CTM, ASX: CTD) today reported its half-year results, with earnings (EBITDA) of $53.5 million reflecting a 32 per cent increase on the previous year. The company is now trading at the top of its previous guidance range, at $120-125 million. CTM Managing Director and founder Jamie Pherous said the strong performance highlights the company’s strategy to build a global network by applying a high-quality growth business model.
“We remain focused on winning and retaining customers, driving internal automation and innovation, and ensuring high staff engagement and customer satisfaction,” he said.
Despite uncertainty regarding US tax reform and the impact of weather events, CTM North America provided steady revenue and profit contributions, with earnings up 9 per cent on
constant currency. Increased client activity and the positive impact of the tax changes will deliver an improved second half, while CTM will continue to investigate possible strategic
acquisitions in the region.
“There are encouraging signs related to the tax reform, with customer activity already recovering since January 2018,” CTM’s CEO for North America, Chris Thelen said. “Our
highly experienced and diligent team continue to demonstrate their commitment to delivering CTM’s value proposition every day, delivering exceptional service and results to our
CTM’s global operations continued to grow, recording $2.25 billion in total transaction value, up 21 per cent, with revenues up 15 per cent. The performance has been supported by a
16.6 per cent rise in organic growth, contributing $6.7 million to the company’s profit growth and reflecting the efforts of CTM’s hard-working team to win and retain customers.
“Our win and retention rates are at historically high levels, while our proven M&A strategy is also providing strong returns,” Mr Pherous said. “We have delivered a great set of results
despite ticket price decline affecting revenue and a negative foreign exchange rate impact.”
CTM’s founding region, Australia and New Zealand, continued to outperform, reporting a 20 per cent increase in underlying EBITDA to $18.9 million. This result was secured with
record client win and retention rates, while an impressive 80 per cent of customers transactions are now completed online.
Europe was CTM’s top performing region by growth percentage, with an underlying EBITDA of $12.9 million up 239 per cent on the prior corresponding period. The performance was underpinned by a combination of increased online business activity and strong client win rates. The business expects further outperformance in the second half.
CTM Asia’s underlying business faced headwinds following unexpected ticket decline negatively impacting supplier revenue. However, the company is expecting strong growth in the second half with benefits from easing of controls on airfares and securing new clients off the back of CTM’s technology offering in the region.
Global presence and technology
Mr Pherous said CTM had now established a global footprint in all its primary markets, with approximately 70 per cent of profits derived offshore.
“We continue to win significant customers off the back of our increased global presence and award-winning SMART technology offering,” he said. “Our regional technology development strategy is well underway, allowing us to customize the global technology platform for local market needs, with a large flow of developments scheduled throughout FY18 in all regions.”
Mr Pherous said CTM’s employees remain central to the company ongoing success, with staff engagement levels continuing to outperform benchmarks.
“We will continue to focus on winning market share by combining local experience with industry-leading technology and are expecting a strong second half this financial year,” he said.
Mr Pherous said CTM would focus on successfully executing its value proposition in every global market, delivering customer service excellence and industry-leading technology solutions that demonstrate a return on investment.
“CTM is well positioned to profit from enormous market share potential across the globe,” he said. “Our management team will continue to leverage our scale and buying power to ensure long-term sustainability and earnings certainty. We will also pursue acquisition opportunities that will further enhance our offering to customers throughout the world.”
The CTM Board has declared an interim fully franked dividend of 15 cents per share an increase of 25 per cent on the prior corresponding period. It will be paid on 11 April 2018.
About Corporate Travel Management (CTM)
CTM is an award-winning provider of innovative and cost-effective travel management solutions to the corporate market. Its proven business strategy combines personalised service excellence with client facing technology solutions to deliver a return on investment to clients. Headquartered in Australia, the company employs approximately 2,250 FTE staff globally and provides local services solutions to clients in more than 70 countries.
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