Shares in Corporate Travel Management (ASX: CTD) were trading around 10% higher at the open after the corporate travel specialist posted a better than expected 1H FY25 result with A&NZ and U.S. segments beating estimates by 19% and 10% respectively.
While the group posted a 42% slide in first-half statutory profit on the back of lower revenues from Europe (EU), the market appears to be more focused on future growth prospects.
The group has flagged earnings growth for the 2H of FY25 and FY26.
Overall, the FY25 earnings guidance was downgraded by 2.3% against consensus estimates; and based on RBC Capital Markets analysis, indicative targets provided for FY26 earnings imply a 6% upgrade to consensus expectations for that year.
Jamie Pheoris, managing director reassured investors today that rest of the world (RoW) remains on track for 10% revenue growth on the previous period, while earnings margin is expected to be 27.5% for the full year, up 450bps on the previous period.
Strong earnings growth
This implies strong earnings growth of 35% for the full year and the group has flagged North America (NA) as being the biggest contributor to 2H results as the momentum in the region continues.
Performance in A&NZ and NA remained strong but the group had previously flagged a revenue decline in EU, which comprises up to 20% of revenue.
Meanwhile, the group expects greater clarity on UK government spending to result in a 24% overall decline in its European revenue.
During 1H FY25, the group retained 97% of existing clients and recorded new client wins with an estimated annualised Total Transaction Value (TTV) of $600 million at 31 December 2024.
As of 14 February 2025, the new client win total surpassed $880 million.
The Group maintains a strong balance sheet, with no debt and $75.5 million in cash at 31 December 2024.
Key numbers from today's 1H FY25 update include:
Statutory profit for the six months to December, down 42% to $28.4 million.
Underlying net profit sank by a third to $38.7 million.
Revenue was down 6% to $342.8 million.
Interim dividend of 10 cents a share, down from 17 cents a year ago.
1H25 Underlying earnings $77.4 million, down 23%.
EU revenue of $56.5 million, and underlying EBITDA of $21.8 million.
A&NZ revenue of $96.1 million and underlying earnings of $28.5 million, up 18% and 53%.
NA revenue of $159.9 million and underlying earnings of $30.5 million, up 6% and 49%.
Asia revenue of $30.1 million and underlying earnings of $7.7 million, down 7% and 15%.
Outlook
Commenting on today’s result Pheoris said:
“Our largest regions of North America and Australia and New Zealand are leading the way and Europe is now set up for a strong finish to the year as we on-board new corporate clients.”
“We remain focused on our strategy to double FY24 EPS within five years, supported by disciplined capital management and ongoing investment in proprietary technology solutions.”
The group’s on-market share buy-back program announced in October 2023 was re-set in August 2024 to a value of up to $100 million, with the completion date extended to 30 June 2025.
RBC Capital Markets analyst Wei-Weng Chen viewed today’s result as an FY25 downgrade but FY26 'indicatively' an upgrade.
On balance, Citi regards the group’s 1H FY25 numbers as a "strong" result with good trends in A&NZ. The broker is Buy Rated with a target price of $13.90.
Corporate Travel has a market cap of $2.4 billion making it an ASX200 stock; the share price is down 17% in one year and up 23% year to date.
The stock appears to be in a medium-term rally confirmed by multiple indicators.
Most importantly, the 5-day moving average is above the 50-day moving average and the 20-day moving average is rising.
Consensus is Hold.
This article does not constitute financial product advice. You should consider independent advice before making financial decisions.
