The Corporate Travel Management (ASX: CTD) share price has risen 7.5% in reaction to a trading update given at today’s annual general meeting (AGM).
Corporate Travel Management is a provider of travel management solutions to the corporate market. It prides itself on personalised service excellence and client-facing technology solutions, and these traits have helped them to win AFTA’s award for Australia’s Best Corporate Travel Management Company twelve times. Corporate Travel is currently operating throughout Australia, New Zealand, North America, Europe and Asia.
Corporate Travel Management’s FY20 Trading Update
At the AGM today Corporate Travel Management confirmed its full year guidance of underlying EBITDA (click here to learn what EBITDA means) of between $165 million to $175 million which would represent growth of approximately 10% to 16.5% compared to FY19.
Australia and New Zealand
Corporate Travel said that despite client activity being “patchy”, new client wins and growth from previous wins mean the first half profit contribution should be a “solid result”.
Europe
In Europe the travel company said it had performed well despite challenging conditions thanks to record client wins, cost management and diversity of its client base.
Since August Europe has seen activity improvements with October 2019 being at the same level as October 2018. Corporate Travel’s guidance assumed uncertainty for the entire December 2019 half.
Asia
In Asia, Hong Kong has seen problems because of the protests leading to client activity lower than last year.
Corporate Travel still thinks it will achieve full year growth because of the very weak activity in the second half of FY19 as well as integration benefits and client wins across the various segments of the business.
USA
In the United States the company continues to invest for long term growth, but EBITDA is expected to be lower in the first half of FY20, although the company is expecting a stronger second half thanks to client wins and a reduction in costs.
Summary
The company’s total costs are expected to increase this year because of the investment in technology and people, but this is included in the given guidance. Future years are expected to show relatively flat cost growth.
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