Corporate Travel Management back in acquisition game



Corporate Travel Management (CTM) has confirmed the declining short-term interest rate by revealing a 34 percent jump in earnings attributable almost exclusively to organic growth, a change from the acquisitions-based results of the past.

CTM's managing director and founder Jamie Pherous said the earnings, including the pre-depreciation and amortization write-downs by 27 percent to $ 125.4 million, justified its global expansion strategy as organic growth was $ 18.9 million from the $ 21 , 8 million jump in underlying net profit had contributed after tax (NPAT) to $ 86 million.

The shares of CTM, of which Mr. Pherous holds 19 percent, fell marginally against their $ 31.20 open on Wednesday afternoon AEST at $ 30.70. One of ASX's most short-circuited shares last August, with 8 percent of shares held by short-sellers, is the fact that the company was too dependent on acquisitions for growth, short-term interest rates have now been reduced to 4.4 percent .

After 18 months without acquisition, CTM is now finalizing a payout of $ 50 million for three quarters of Lotus Travel from Hong Kong, and Mr. Pherous signaled more acquisitions in Europe and the US.

"In Australia we have a market share of 15 percent, so we do not miss a tender and we can be very efficient at winning and keeping business," he said. The Australian Financial Review.

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Although the acquisition of Lotus CTM had delivered a critical mass in Asia, Mr. Pherous said that CTM still needs to grow significantly in the US and Europe, so that those regions "have a meaningful understanding of who we are".

In the US, Mr. Pherous wants to increase the total annual transaction volume to $ 3 billion, an increase of $ 1.3 billion in 2017-18 and in Europe of $ 18 billion in 2017-2018 of $ 1 billion.

Investment in booking tool

"The profit multiples on acquisitions have increased in Europe and the US, but taxes have fallen and the NPAT multiples are about the same," he said.

"We will be as disciplined as we have always done, we have a track record of using these acquisitions in an optimized scale."

CTM has spent a lot of money developing an online booking tool and a browser-based, device-independent travel management platform that generated $ 13.7 million in capital expenditures in 2017-18 and prepared to spend $ 10 million to keep them alone to be implemented in 2018-19.

Mr. Pherous said that a combination of automated technology and personal service on difficult routes was crucial for the organic growth of CTM in a fragmented sector, where it is the sixth largest business travel manager in the world, but still commands less than 1 percent of the market .

Regarding an ABC investigation, in which Wednesday the Flight Center advisers were accused of arbitrary markup flights to increase their missions, Mr. Pherous said that CTM was the only Australian travel agency accredited for transparent airline ticket prices through the Airocheck Fairfare process using data from the International Air Transport Association.

"It's public that if you look at our margin per customer, that's half of what Flight Center reports," he said.


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