The Corporate Travel Management Ltd (ASX: CTD) share price is under pressure on Tuesday following the release of its half year results.
At the time of writing, the corporate travel specialist's shares are down almost 2% to $17.71.
How did Corporate Travel Management perform in the first half?
Corporate Travel Management had a tough half due to the impact that COVID-19 has had on global travel markets.
For the six months ended 31 December, the company reported an 88% decline in total transaction value (TTV) to $403.8 million. This led to a 75% reduction in half year revenue (excluding government grants and other income) to $56.5 million.
Including government grants of $13.7 million and other income of $4 million, revenue was down 67% to $74.25 million.
On the bottom line, the company reported an underlying loss after tax of $26 million and a statutory loss after tax of $36.4 million. The latter compares to a pre-COVID profit of $32.9 million in the prior corresponding period.
At the end of the period, Corporate Travel Management had net cash of $119 million. This had reduced slightly to $115 million as of 15 February. The company also has a $178 million undrawn committed finance facility.
Unsurprisingly, the Corporate Travel Management board will not be declaring an interim dividend.
Management commentary
The company's Managing Director, Jamie Pherous, remains positive on the future and notes that its operations are close to becoming break-even.
He said: "We are in a good position to capitalise on a recovery in corporate travel activity because we have a strong balance sheet with excess cash for further opportunities. We are now very close to a break-even position with new client revenue momentum and remain most leveraged to the largest travel markets that are also the most advanced in rolling out vaccinations."
Mr Pherous also appears confident that the company will come out of the crisis in a stronger position. This is especially the case following its T&T acquisition and new client wins.
He explained: "We are positioned to be a significantly larger business post-COVID due to the strategic acquisition of T&T, the organic growth dynamics we are experiencing and a lower permanent cost base. Significant new client wins across all of our regions supported a better than expected first-half earnings result and have given us revenue momentum into the second half."
"We have maintained service levels throughout the pandemic and continued to invest in our proprietary technology to deploy tailored solutions to quickly address changing client needs. In fact, technology spend is returning to pre-COVID levels. Our scale and financial strength, combined with CTM's personalised service and tailored technology solutions, have translated into new client wins and growing market share globally," he added.
Outlook
Given the continuing uncertainty regarding government travel restrictions and the efficacy of national vaccination programs, management advised that it is not in a position to provide earnings guidance for the second half.
However, it does expect its ANZ and European operations to be profitable during the half. This is thanks to vaccine rollouts, a lower permanent cost base, and ANZ domestic borders remaining largely open.
Mr Pherous concluded: "Whilst Australia and New Zealand have not commenced their vaccination programmes, USA and UK are well advanced. The UK (population 67m) has surpassed 15m vaccinations and the USA (population 329m) has surpassed 50m vaccinations. Both countries expect to have the high-risk segment of the population vaccinated in this quarter, potentially allowing a relaxation in travel restrictions, much earlier than ANZ. Given 70% of our pre-COVID revenue is derived from the UK and USA, we are well positioned for the incremental revenue gains from travel relaxations in these markets."
