The Corporate Travel Management Ltd (ASX: CTD) share price went up 3.5% today after releasing a profit update for the third quarter of FY21.
Corporate Travel’s FY21 profit update
The ASX travel share revealed at the UBS investor conference that it is returning to profit.
It broke-even in March 2021 and it expects positive underlying EBITDA (EBITDA explained) in the fourth quarter of FY21. This will be led by the UK, EU and ANZ regions for the business.
In Australia and New Zealand, there is strong demand with total client activity rising to 85% of FY19 booking levels as of last week. New Zealand continues to be a “standout” and, as of last week, was trading at above 160% of FY19 booking levels.
Looking to the northern hemisphere, despite lockdowns in the UK and Europe, significant essential travel client wins in the region are contributing to profitability for the group. The US is also experiencing positive signs of activity recovery.
Management are bullish about a recovery
The company pointed out that around 70% of its pro forma (estimated) FY19 revenue was generated from the US and the UK.
Those two countries have some of the most advanced vaccination rollouts and are on track for most adults to be vaccinated by the northern hemisphere summer in June or July.
Corporate Travel Management believes that the speed of the rollouts supports expectations of a rapid return to corporate domestic travel and meaningful levels of European-wide and trans-Atlantic travel after the northern hemisphere summer period.
Continued success in winning clients and market share
The company believes its value proposition is stronger in a post-COVID world. It said that its highly valued delivery mix of expert service, technology and return on investment (ROI) is more relevant in this new environment.
Management boasted that it continues to win significant new clients.
The ASX travel share also pointed out that the Travel and Transport US acquisition is well progressed with all synergies on track as expected.
Strong response from the Corporate Travel Management share price
On a day where the share market declined, seeing a rise of over 3% was a solid positive reaction.
The ASX travel share said that as a result of the Travel and Transport acquisition, its revenue is 64% ahead and underlying EBITDA is up 44% compared to FY19 on a pro forma FY19 basis.
The Corporate Travel Management share price could be one to watch if this strength of recovery continues. It’s one of the ASX growth shares I’d keep an eye on as a recovery play. The northern hemisphere’s recovery is likely to continue to keep getting stronger.
