A sales slowdown and client losses from the second half of the prior financial year began to catch up with corporate travel group Hogg Robinson (HRG) in the reported period. As a result, underlying operating profit was down 11 per cent at constant currencies.
Both travel booking and travel spend were down across all geographies for the group’s HRG travel management business, with the exception of a 2 per cent constant-currency travel spend increase in the Nordics.
But online adoption was up everywhere except Australia, with the group launching a new portal to improve access to travel content. The online trend and price competition are expected to keep up pressure on the division’s margins in the short term, although management is confident of a full-year performance in line with expectations. The division also won a number of blue-chip clients in the period such as Roll-Royce and US information services provider Cognizant.
Fraedom, the group’s payment services business, performed impressively. It grew revenue and adjusted operating profit by 12 per cent and 30 per cent, respectively. Operating costs for the division grew slower than revenues in the period, causing the outsized jump in profit to £3.7m.
Analysts at Investec are forecasting adjusted pre tax profit of £33m for the year to March 2018, giving EPS of 7p (from £37m and 7.6p in FY2017).
| HOGG ROBINSON (HRG) | ||||
| ORD PRICE: | 75p | MARKET VALUE: | £246m | |
| TOUCH: | 75-78p | 12-MONTH HIGH: | 83p | LOW: 63p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 11 | |
| NET ASSET VALUE: | * | NET DEBT: | £30.1m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 163.6 | 14.0 | 2.90 | 0.72 |
| 2017 | 161.9 | 13.3 | 2.80 | 0.76 |
| % change | -1 | -5 | -3 | +6 |
| Ex-div: | 7 Dec | |||
| Payment: | 8 Jan | |||
| *Negative shareholders' funds | ||||
