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Tourism Holdings to beef up investment in Thor joint venture

Tuesday 28th August 2018

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Tourism Holdings will step up investment in its TH2 joint venture with RV maker Thor Industries, which will stop it from repeating another year of record profits. 

The Auckland-based company reported a record net profit of $62.4 million in the year ended June 30, of which $23.1 million was an accounting gain on setting up the venture with Thor. Earnings before interest and taxation before one-off gains rose 33 percent to $63.5 million on a 25 percent increase in revenue to $425.9 million. 

"This is a complex result with the one-off gains, USA tax changes, the first full year of El Monte and exchange rate movement impacts. The ebit improvement of 33 percent on the prior corresponding year represents a great growth rate," said chief executive Grant Webster. 

In February, Tourism Holdings announced it had formed a joint venture with Thor Industries, the world's largest manufacturer of the vehicles, to develop a single platform to connect a wide range of services in the growing market for RVs. The business - which geared toward leveraging ditigal assets - is headquartered in the US, but has teams operating in New Zealand and Australia. 

Webster said Tourism Holdings "contributed assets and IP into the business for a 50 percent shareholding. We invested a minimal amount of cash for a business that has such potential." 

In the last four months, as the business has come together, the teams have worked on the detail of the rollout plans, the next stages of product development and a deeper review of the customer propositions. "All this led to an agreement with Thor that early stage larger investment will be the best avenue to success for this business," he said. 

Tourism Holdings will invest around $15 million in the business this year, which will mean net profit will fall from 2018's record. Still, core business operating earnings before interest and tax will increase. He did not provide more specific guidance. 

The shares fell 3.4 percent to $5.94, the lowest level since February. 

Chair Rob Campbell said the company's goal of reaching a net profit of $50 million hasn't "materially changed" but with the investment in TH2 and other potential changes planned over the coming year "we will reset a new goal" and it will be "substantially higher." 

He also said other merger and acquisition activity in the works and the company is in discussions with various parties around the world. 

The company said it would pay a final dividend of 14 cents a share, taking the total dividend to 27 cents a share.  


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