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Tourism Holdings lifts profit

Thursday 26th August 2010

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Tourism Holdings has announced a 59% lift in net profit as a turnaround strategy launched 18 months ago finally kicks in.

The campervan renter and tourist services whose attractions include operating Waitomo Glowworm Caves, increased profit to $4.6 million, as total operating revenues gained 8% to $182 million. The shares rose 1.3% to 80 cents.

Net debt dropped 37% to $37 million in what chairman Keith Smith said was a company demonstrating positive momentum, but requiring a higher return on the business's capital investment. THL will pay a dividend of 4 cents after omitting its payment in the previous year.

"The path to desired profit levels will be based on three key strategies," Smith said. "Transforming the current customer offer, creating new opportunities for growth to leverage the fixed cost base, and adapting the business model to improve the margins on the rentals business."

THL's 2011 year is expected to show minimal growth from rental revenue and visitation perspective, Smith said, with the period to the end of October being key for rentals though the company can't provide adequate guidance for the year.

"Current performance and booking trends see a softening of the backpacker and U.K. markets in particular," he said.

"The strength of the New Zealand and Australian dollars internationally is also contributing to a lower on-the-ground spend once visitors arrive."

Revenue for the rentals business, excluding fleet sales was up 3% to $118 million for the end of June year, though it dropped by 5% in the second half.

During the past six months the new Waitomo building had been completed, and new Maui Platinum two, four and six berth vehicles brought into production. THL has also established a new Maui rentals proposition, delivered self-check in options for customers and delivered new website technology Smith said.

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