Corporate Travel Management back to pre-Covid days

The travel group’s recovery continues as revenue and profit soars, helped in part by a string of new clients.

Corporate Travel Management has forecast a sharp jump in annual underlying earnings following a 79 per cent jump in interim revenue. Picture: Splash News/Media Mode

Corporate Travel Management has forecast a sharp jump in annual underlying earnings following a 79 per cent jump in interim revenue, driving by a number of new clients as trading conditions improve.

The Brisbane-based group’s revenue soared 79 per cent to $291.9m over the six months to December 31 from a year earlier, resulting in more than a doubling of underlying earnings to $51.3m from $18.2m.

Speaking from his North American offices in Omaha on Wednesday morning, managing director Jamie Pherous forecast annual underlying earnings guidance of $160m to $180m and said he had taken on more staff than necessary, some 3062 employees, to deal with the business turnaround as well as the expectation of adding more clients to his books.

“We largely have the workforce we need, we are not chasing more staff, we have employed ahead of the curve,” Mr Pherous said, adding that he plans to introduce more automation to the business,” he said.

“We are still expecting a full revenue recovery by the 2024 financial year.”

Of Corporate Travel’s four major business regions, Australia and New Zealand, North America, Europe and Asia, Mr Pherous singled out Europe as the standout performer, saying the UK had produced record results.

“The UK is a stunning result, we are bigger than we were before the 2019 financial year,” he said.

Total revenue for its European operations and other income increased by 3 per cent to $45.2m, but underlying earnings dropped 19 per cent to $17m. The company was hampered by staff shortages and the partial shutdown of Heathrow Airport.

“In the UK, strong travel demand early in the half challenged the ability to supply services at reasonable levels, leading to travel impediments,” Corporate Travel said in a statement. “This supply and demand imbalance was resolved over the period.”

“Through the period, management in the UK has been challenged by rising employee costs and staff turnover in an economy experiencing high inflation and broad industrial action and very low unemployment. Investment has been made in the region through staff recruitment and automation, to ensure high customer service standards while mitigating delivery costs. This additional investment is supporting a growing business and increasing revenue. Going forward, automation will continue to be a focus as low unemployment and the broadbased travel recover continues to challenge the staffing in the region.”

Mr Pherous would not be drawn on the identities of the new businesses Corporate Travel had won, but said it was “a fair representative of the world’s industries”.

Given the company’s strong balance sheet, he expected there would be further consolidation within the industry, and he would make more acquisitions.

Asked about the $175m acquisition of the Helloworld corporate and travel entertainment business and whether he was certain of retaining the federal government public service contracts Mr Pherous said: “Whilst we hope to retain this contract, the contract would likely roll off at the end of the financial year 2024, so the outcome does not have an impact on financial year 2023 or financial year 2024.”

“We are doing everything that we can do to manage and set new standards for that customer.”

Going forward, Mr Pherous said January was a record month for Corporate Travel in Europe, while North America had its highest transactions since Covid-19.

“Asia is now profitable and China, where we have a big presence in Hong Kong, is opening up.”

In a note, Magnus Citadel said Corporate Travel’s EBITDA had come in below expectations. “The company is expecting a significantly higher revenue/EBITDA margin in the second half due to significant client wins transacting, supply chain stability and increasing productivity.”

Corporate Travel will pay an interim unfranked dividend of 6c a share on April 14 as its recovery continues. No dividend was paid over the same six-month period a year earlier. However, it did pay a 5c dividend for the six months to June 30, 2022.

The shares fell 8.7 per cent to $15.75.

Originally published as Corporate Travel Management back to pre-Covid days