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19 August 2020

Corporate Travel Management announces better than expected Q4 results - North America leads global revenue contribution

Media release
19 August 2020

Corporate Travel Management announces better than expected Q4 results – North America leads global revenue contribution

Corporate Travel Management (CTM, ASX:CTD) reported underlying Net Profit After Tax of AUD32.0m (excluding one-off COVID-19 costs) for the 2019-20 financial year, with the Group’s North American business the largest revenue contributor for the second half.

The global corporate travel group ended the financial year with a strong balance sheet position, with net cash of AUD90.4m supported by operating cash flow of AUD79.2m, plus zero debt and AUD180m in committed and undrawn finance facilities.

The better than expected result came after CTM’s rapid response to the impacts of COVID-19 to rationalize its cost base and maintain a strong liquidity position.

North America CEO Maureen Brady said, “North America is the biggest corporate travel market in the world and it’s becoming CTM’s powerhouse.  We continue to grow market share and we have implemented the new business we won late in the first half.”

Brady continued, “Client retention across the global business was 97% for the year and we beat that in North America, achieving 98-plus per cent. We won new business in the second half in spite of COVID-19, which will enhance our growth as restrictions ease.”

The global CTM business is starting to see a bounce back from the low point for corporate travel in April.

Reported fourth quarter revenue averaged AUD 11.5m per month compared with a May 2020 forecast of AUD2-5m per month, resulting from the Group’s high level of exposure to Essential Services industries that are permitted to travel during the COVID-19 restrictions.

With international travel limited by government restrictions, CTM’s focus on domestic travel has also been an advantage. Approximately 60% of the Group’s pre-pandemic revenue came from travel that departs and arrives in the same country. Domestic travel during COVID-19 is more widely accepted in the U.S. than the rest of the world, and CTM’s U.S. bookings are heavily weighted towards these travelers.

Thirty-eight per cent of CTM’s North America revenue in the period came from Essential Services clients in sectors including government, food services, mining and energy, utilities and healthcare.

Brady said, “July has been our best month since COVID-19 despite summer vacation which normally makes it a slower corporate travel month. With a new North America leadership team, we are pushing hard to grow the business in the United States.”

Brady continued, “CTM has a strong balance sheet and no bad debts in the U.S. We have completed the cost reduction program that has given us a strong foundation to deal with the pandemic and because we moved quickly, we don’t expect any other significant COVID-19 costs this financial year.”

Brady said the Group expects the current downturn will create opportunities for industry consolidation.

“Our strong balance sheet means we can consider opportunities that fit our strategy and acquisition criteria, and we have the balance sheet strength to pursue the right ones,” she said.

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