Corporate Travel Management (ASX:CTD) - Executive Director & Managing Director, Jamie Pherous
Executive Director & Managing Director, Jamie Pherous
Source: Courier Mail
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  • Business travel specialist Corporate Travel Management (CTD) has had a bumpy day after releasing its latest half-year report
  • With Brexit, Hong Kong riots, the U.S.-China trade war, and the coronavirus, the 2020 financial year has been tough for travel
  • Company net profit fell eight per cent compared to the year before, while earnings stayed flat
  • Corporate Travel has downgraded its 2020 earnings outlook in light of the coronavirus impact
  • Still, it seems the company outperformed market expectations
  • After a steep morning decline, shares quickly rebounded and are currently 3.5 per cent up and worth just under $17 each

It’s been a trading day full of turbulence for Corporate Travel Management (CTD) after the release of its latest half-year report.

Shares in the business travel specialist took a steep plunge when the market opened but saw a steady upswing into the green where they have been trading since mid-morning.

Corporate Travel’s financial results were somewhat soft in the report, but seemingly not quite as soft as investors were expecting in the face of what the company called “the most extraordinary combination of macro challenges” from any one financial year in company history.

With the 2020 financial year bringing challenges in the form of Brexit, Hong Kong riots, and the U.S.-China trade war, underlying profit for the travel company fell by eight per cent compared to the same period the year before at $39 million.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) were flat on the previous year at $64.5 million.

Further, the company has downgraded its full-year earnings guidance today as it takes a blow from the spreading Wuhan coronavirus, dubbed Covid-19. Corporate Travel now expects earnings of between $125 million and $150 million for 2020 compared to the originally-forecast $165 million and $175 million.

Corporate Travel seems to be erring on the side of caution when predicting the impact of Covid-19 so as not to mislead investors. Based on the impact of previous health epidemics such as SARS in 2003 and Ebola in 2013, Corporate Travel is assuming the worse end of predictions.

While the impact from previous pandemics has typically spanned four-to-six months with a peak impact period of one-to-two months, the company is assuming a full six-month impact with a two-month peak period.

The company said with the government quickly suspending travel to and from China in response to the virus, it is tough to accurately predict the severity of the virus’ impact on company operations. As such, Corporate Travel would likely prefer to overstate the impact to protect itself from future market expectations.

Nevertheless, with China accounting for roughly a third of all transactions relating to flights to and from Asia, the company is assuming the brace position for the remainder of the year.

Still, it hasn’t been all bad for the company. Despite the challenges, revenue grew by six per cent over the half-year, coming in at $222.2 million compared to 2018’s $210.2 million. Similarly, Corporate Travel’s total transaction value increased 12 per cent over to $3.3 billion.

Importantly, the company will be maintaining its half-franked 18-cent dividend for the first half of the financial year.

For now, this seems to be enough to tide investors over until the true impact of Covid-19 is realised. After this morning’s sudden 10.44 per cent freefall, shares have stayed steady and are up 2.84 per cent in mid-afternoon trade. Currently, shares in Corporate Travel are trading for $16.68 each.

CTD by the numbers
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