UPDATE 3-Hogg Robinson sees better FY as travel demand improves

Tue Nov 30, 2010 9:08am EST

Related Topics

* H1 pretax profit more than doubles

* Ups interim div by 25 pct to 0.5p vs 0.4p

* Revenue up 9 pct as client travels spend rises

* Sees FY results ahead of expectations (Adds analyst comments, background, updates shares)

By Adveith Nair

BANGALORE, Nov 30 (Reuters) - British corporate travel firm Hogg Robinson Group Plc's (HRG.L) first-half profit more than doubled and it said full-year results would race past market estimates on expectations that an improving economy will continue to bolster travel activity.

"Revenue is up, cash flow is strong, and there are increasing signs that our client base is retuning to higher levels of travel frequency," Finance Director Julian Steadman told Reuters.

Passenger demand -- a reflection of business and consumer confidence -- was 10.1 percent higher in October than a year earlier, and is now 5 percent above pre-crisis levels, airline industry body IATA had said last week. [ID:nLDE6AN1W2]

"With the strong client base behind us returning to normal, we are flagging to the market that expectations for the full year will be slightly ahead of what they thought it would be before," Steadman said.

Analysts currently expect full-year pretax profit to rise 35 percent to 28.8 million pounds and revenue to grow 4 percent to 339.5 million pounds, according to Thomson Reuters I/B/E/S.

Collins Stewart analysts said though the company had limited visibility, business confidence and travel statistics produced by IATA remain positive.

"We believe that client revenues in Oct-Nov continue to track the 5-6 percent growth witnessed in the first half," they said.

Collins Stewart analysts said client travel spend and air transactions were still 10-15 percent below their levels in the first half of 2008, and had further room for a recovery.

Global airlines have hiked their profit forecasts this year as the recession fades and traffic rises. In October, British Airways BAY.L posted its first profit in two years and said it expects to deliver further growth in 2011. [ID:nLDE69S09J]

For the six months ended Sept. 30, pretax profit before items at Hogg Robinson rose to 15.3 million pounds ($23.82 million) from 7.5 million pounds last year. Revenue was up 9 percent to 169.2 million pounds.

Hogg Robinson shares, which have been largely unchanged over the past year, were up about a percent at 35 pence at 1357 GMT Tuesday on the London Stock Exchange.

($1=.6423 Pound) (Reporting by Adveith Nair in Bangalore; Editing by Prem Udayabhanu, Vyas Mohan)

FILED UNDER: