Corporate Travel Management looks to buy in US and Europe

Corporate Travel Management managing director Jamie Pherous has been busy making acquisitions. Photo: Glenn Hunt

Corporate Travel Management will keep looking for more acquisitions to bolster its business in the United States and Europe but chief executive Jamie Pherous believes it has enough scale in Australia, New Zealand and Asia.

"You can expect one a year and so forth," Mr Pherous said of deals. "It comes back to the States and Europe. The rest of the world, we are just rolling with what we've got."

It comes back to the States and Europe. The rest of the world, we are just rolling with what we've got. 

Jamie Pherous, Corporate Travel Management CEO

His comments came after the Brisbane-based company reported a 38 per cent rise in first-half underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to a record $28 million as a result of strong organic growth and contributions from acquisitions.

On a bottom line basis, the company reported a 75 per cent rise in net profit to $17.3 million and declared a fully-franked interim dividend of 9¢ a share, up 50 per cent from last year. Total transaction values grew by 54 per cent to $1.72 billion during the half, with organic growth representing 74 per cent of that figure.

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CTM shares rose 22¢, or 1.8 per cent, to $12.22. The stock has fallen by 3.6 per cent over the last 12 months, compared with a 17.9 per cent fall in the benchmark S&P/ASX 200 index over the same period.

"We are extremely pleased with the result given the continued tough business conditions," Mr Pherous said. "All regions have grown and achieved record profit results."

He said the company was on track to meet its full-year guidance for underlying EBITDA of at or around $68 million, which was upgraded in December after its $47.6 million aquisition of Los Angeles-based Montrose Travel.

In the largest division, Australia/New Zealand, EBITDA rose by 12 per cent during the first half despite the slowdown in the mining and oil and gas sectors. CTM said it had won a record value of new clients in the half and remained well positioned for a recovery in corporate activity.

"We have assumed activity is really flat at best," he said of expectations for the region in the second half. "If we were relying on activity to grow we wouldn't be doing well. I can't stress how much business we've won."

Mr Pherous said costs continued to come down in Australia because 75 to 80 per cent of the business was now transacted online and exiting employees weren't being replaced as a result.

"We are letting normal attrition take care of itself with automation," he said.

In other regions, far less business is automated, leaving room for future margin gains.

Mr Pherous said CTM would continue to invest heavily in new technologies.

"Innovation is a key to our business," he said. "We want to be at the front edge of technology and leading rather than following."

Source: Corporate Travel Management looks to buy in US and Europe