Corporate Travel Management returns to profitability – recovery underway
CTM announced earnings for the year ended June 2021, posting a $13.6m June quarter underlying EBITDA profit, representing a $19.1m turnaround on the previous quarter. Positive second half underlying EBITDA of $8.1m helped reduce the Group’s underlying EBITDA loss to $7.3m for the full year.
After the acquisition of Travel and Transport (T& T) in November 2020, CTM is now estimated to be the world’s fourth largest global travel management company and will be a much larger business post-COVID.
North America and Europe currently generate close to 80% of Group revenue after market share gains for CTM in these key markets, compared to 72% of pre-COVID 2019 revenue.
Managing Director, Jamie Pherous said the company’s value proposition of expert service, leading technology and measurable return on investment is increasingly relevant for businesses in the current complex travel environment, driving the market share gains. “We returned to positive underlying profit in the second half because of a rapid turnaround in fourth quarter activity in North America and Europe. These regions have made significant progress in vaccine roll-outs and reopening the economy, which gives us reason to be optimistic about FY22.
“We continue to see encouraging signs that momentum is building in these regions. July 2021 has delivered a record revenue result post-COVID. We have successfully integrated the T& T team into the CTM business, and aligning our operating culture, strategic vision and client focus has allowed us to capitalise on the rebound in travel activity and grow our exposure to the world’s largest travel market,” Mr Pherous said.
CTM finished the year with no debt and cash of $99.0m. Given the strong balance sheet and the recovery of the business, CTM is targeting a return to dividend payments in calendar 2022.
Momentum across key regions of North America and Europe North America was CTM’s largest region in the financial year in terms of both Group revenue and other income ($96.0m) and new client wins. The region’s rapid recovery meant June quarter revenues grew 47% versus the March quarter, resulting in a return to underlying EBITDA of $4.9m in the last quarter. This revenue momentum continued into July, defying a typical summer vacation slow down.
Revenue and other income of $42.0m in Europe was delivered by a combination of project wins, logistics clients, and ongoing essential travel, despite the lockdown in the UK during the second half. Domestic travel is quickly recovering in the UK, and the trend is expected to accelerate across Europe after the summer vacation. Thanks to a strong $12.3m contribution in the second half, CTM Europe turned a first half loss into an underlying $10.1m EBITDA profit for the full year.
The lucrative Transatlantic and intra-European segments are opening or expected to re-open in the first half of the year to June 2022 and should materially contribute to Group revenue and profitability in both regions.
CTM’s Australia / New Zealand region remained profitable, reporting revenue and other income of $42.0m and underlying EBITDA of $7.7m, despite continued border closures. Lockdowns and the closure of Sydney as a travel hub are limiting the national recovery. Despite this, the AU/NZ business remains resilient, experiencing strong recovery in volumes when border restrictions have been lifted, with domestic travel activity in New Zealand currently over 150% of pre-COVID levels.
The trading environment in the Asia region remains challenging because of the reliance on international travel. While CTM is growing market share in Asia, the region is expected to remain marginally loss-making until planned travel bubbles are opened.
CTM expects the rebound in corporate travel to continue, forecasting underlying EBITDA for the Group to be positive for the three months to September 2021 and building in the following quarter as North America, the United Kingdom and Europe return to work after summer vacation.
