Hot on the heels of the Helloworld Travel Ltd (ASX: HLO) result yesterday, corporate travel specialist Corporate Travel Management Ltd (ASX: CTD) released its full-year results on Wednesday.
Although the Corporate Travel Management share price only edged higher, don't let that fool you into thinking this was a soft result. The fast-growing company certainly didn't disappoint in FY 2018 and delivered yet another stellar result.
For the 12 months ended June 30, Corporate Travel Management achieved total transaction value growth of 19% to $4,958.3 million, revenue growth of 14% to $372.2 million, and underlying net profit after tax (excluding acquisition amortisation) growth of 34% to $86 million. The latter came in 29% higher year-on-year on a per share basis at 81.1 cents.
The board declared a final dividend of 21 cents per share, bringing its full year dividend to 36 cents per share.
The result was driven by strong performances from all regions, not least in Europe where revenue grew 61% and EBITDA increased 80%. As shown below, this was supported by another solid performance from the ANZ region. While revenues declined in Asia, improvements in its margins led to solid EBITDA growth.
Managing director Jamie Pherous believes that this demonstrates that its business model and strategic investment decisions are working well. He added that: "These results support the strategy that we have taken to build a global network and apply the CTM business model around winning and retaining customers, driving internal automation and client innovation and ensuring high staff engagement and client satisfaction."
As well as benefiting from acquisitions, Corporate Travel Management achieved solid organic profit growth of approximately $18.9 million in FY 2018. This equates to approximately 70% of its profit growth during the year. Management put this down to the company's ability to win multinational clients who have recognised its international capabilities.
Outlook.
In FY 2019 management expects the company to generate underlying EBITDA in the range of $144 million to $150 million, representing year-on-year growth of approximately 15% and 20%.
This guidance is based on the Australian dollar trading at an average of 76 U.S. cents, HK$6, and 56 British pence during the 12 months.
Should you invest?
I think this result demonstrated why Corporate Travel Management is regarded as one of the best growth shares on the local market.
While its shares are expensive at 38x earnings, I feel the company is capable of growing earnings at a strong enough rate over the coming years to justify this premium.
However, my top pick in the industry remains Webjet Limited (ASX: WEB), which is scheduled to report its results tomorrow. I'm expecting another strong result from the online travel agent.
