Corporate Travel Management says its full year result will take a hit from coronavirus travel bans after a first-half already blighted by Brexit, the Hong Kong demonstrations, the US-China trade war.
The company’s share price plunged after it cut its full-year underlying earnings guidance on Wednesday to between $125 million and $150 million from a previously stated target of $165 million to $175 million, on account of “unprecedented disruption” from the coronavirus on international travel.
The update came as the firm’s statutory net profit declined 14 per cent to $35.1 million for the six months to December 31 following macro-economic impacts from global events such as Brexit, demonstrations in Hong Kong and the US-China trade war.
However, the Sydney-based firm reported its revenue grew by 6.0 per cent to $222.2 million in what chief executive Jamie Pherous described as an otherwise strong performance.
Mr Pherous was also adamant the company would bounce back quickly from the coronavirus hit, with travel activity expected to gradually return to normal levels by July 2020.
“Despite the challenges from Covid-19 on our business, we are not standing still,” chief executive Jamie Pherous said on Wednesday.
“In Asia, we have actioned several plans to manage costs against reduced corporate travel activity. These include reducing staff work weeks to four days, bringing forward leave, freezing non-essential expenses and delaying non-client facing project work”.
Shares in the company fell as low as $13.57 in early trade on Wednesday and were still 6.36 per cent lower at $15.16 after 30 minutes of trade.
Corporate Travel said history suggested the average duration of pandemics of four to six months led it to assume the coronavirus impact will be felt through all of the second half of the year.
“The key difference with Covid-19 from previous pandemics has been the actions of governments to effectively close borders and suspend travel to and from China,” the company said in a release.
“It is difficult to assess with certainty what this may do to severity (of the virus).”
First half revenue growth was largely built on Corporate Travel’s Asian and European regional results, which respectively saw a 12 per cent increase to $43 million, and a 10 per cent increase to $47.7 million.
The company announced a partially franked interim dividend of 18 cents per share, with the franking being lowered from 100 per cent a year ago.
AAP