S&P/ASX 200 Index (ASX: XJO) travel stock Corporate Travel Management Ltd (ASX: CTD) is taking a tumble today.
Shares in the corporate travel services provider closed yesterday, trading for $12.51. In opening trade on Wednesday, they dropped to a 52-week low of $10.80 before gaining some ground. At the time of writing, Corporate Travel shares are changing hands for $11.58, down 7.4%.
For some context, the ASX 200 is down 0.3% at this same time.
This underperformance comes following the release of Corporate Travel's results for the financial year ended 30 June (FY 2024).
Here are the highlights.
Corporate Travel share price drops despite earnings growth
- Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $201.7 million, up 21% from FY 2023
- Underlying net profit after tax (NPAT) of $113.3 million, up 22% year on year
- No debt and $134.8 million cash as at 30 June
- Final unfranked dividend of 12 cents per share, down 44% from the prior final dividend
ASX 200 travel stock slides on below forecast results
Despite the solid growth metrics listed above, investors are selling down the ASX 200 travel stock, with the full-year results coming in below the company's forecast.
Corporate Travel cited some negative macro impacts in its North American market in the second quarter as dragging on its results, noting these issues were limited to the second quarter only.
Also bringing FY 2024 results below forecast were lower than expected revenue and profit from the ASX 200 travel stocks's European Bridging accommodation contract due to changes in government policy.
Management noted that reduced demand from war-related humanitarian projects was now reflected in Corporate Travel's FY 2025 forecast.
Turning to the share buyback announced in November, the company has completed $26.1 million of share repurchases at an average price of $15.55 per share to date. The completion date has been extended to 30 June 2025 and reset to up to $100 million.
The final 12 cents per share dividend brings the total FY 2024 dividends to 29 cents per share, up 4% from FY 2023.
What did management say?
Commenting on the results that have yet to lift the ASX 200 travel stock, management said:
Despite the UK one-off project work being below forecast, the underlying business performed well with the rest of the world operating regions reporting 29% EBITDA growth in the second half. This was led by both the North America and Australia/New Zealand businesses.
Our largest two regions achieved significant performance turnarounds in the second half of the year with EBITDA for each region increasing by 39% compared to the prior corresponding period and carrying momentum into the early months of FY25.
What's next?
Looking at what could impact the ASX 200 travel stock in the year ahead, Corporate Travel is targeting 10% revenue growth for the Rest of the World (North America, ANZ and Asia) in FY 2025, with EBITDA margins expected to grow from 23% to approximately 27.5%.
For Europe, Corporate Travel expects revenue to decline by around 18% and EBITDA margins of approximately 49%.
FY 2025 costs are forecast to be around $23 million, and capex is forecast to be at a similar level to FY2024, or around $47.6 million.
How has the ASX 200 travel stock been tracking?
With today's intraday loss factored in, shares in the ASX 200 travel stock are down 40% over 12 months.
