Hogg Robinson Group: On A Journey
Edison | May 30, 2017 03:38AM ET
Hogg Robinson Group Plc (LON:HRG) has combined a strong set of financials with a declaration of medium-term growth initiatives in both travel management and FinTech. Importantly, their implementation should be facilitated by the success of management’s largely completed restructuring and deleveraging programme. While there will be a short-term cost (we are reducing our current-year PBT forecast by 17%), this is wholly related to stated opex investment rather than any business deterioration (our revenue forecast is unchanged). Robust finances (FY17 net debt/EBITDA of just 0.3x) should allow continued dividend growth (FY17 cover of 3.0x).
H2: Fraedom shows its potential
After H1 +4% constant currency trading profit, an unchanged H2 outturn was predictable in view of more difficult comparatives and still testing conditions. Indeed the 7% weakening in Travel Management constant currency revenue (down 4% in H1) was in line with our forecast as heightened client churn and Brexit-related uncertainty added to longstanding aggressive competitor pricing and the move to online self-booking by clients. However, the 6% decrease in constant currency trading profit was slightly more than we expected but more than made up by an excellent performance (like-for-like +72%) by Fraedom as its H1 investment started to pay off. Net debt reduced by £10m in H2 to £21m (down 38% on March 2016).
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