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Tourism Holdings 1H profit soars 45% as visitor numbers swell demand

Tuesday 23rd February 2016

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Tourism Holdings, the campervan rental company, boosted first-half profit 45 percent and upgraded its full-year profit forecast, as the sector sits in a sweet spot with a weaker kiwi dollar and cheaper oil supporting international travel. 

Net profit rose to $8.2 million in the six months ended Dec. 31, from $5.6 million a year earlier, the Auckland-based company said in a statement. Earnings before tax rose 44 percent to $13.7 million on a 14 percent rise in revenue to $88.8 million.

The company lifted its forecast for annual profit to about $24 million from a previous estimate of $22 million, up from 20.1 million in 2015, which chief executive Grant Webster said reflected "the positive operating environment for tourism here in New Zealand and overseas."

"The peak season is well underway and operating to plan," Webster said. "From a debt perspective, the company is operating well within its own benchmarks. We have changed the manner in which we report fleet capex spend to provide improved investor understanding of how we have created more flexibility in the business model."

Tourism Holdings has improved earnings across its businesses by selling off excess fleet capacity and focusing on margins, and is looking to leverage earnings from New Zealand's booming tourism market to fund growth in the international motorhome market.

Last August, the company said it was targeting annual profit of $30 million by 2019 from its existing businesses, and would use its flexible balance sheet to make value-adding acquisitions. Chairman Rob Campbell today said the company was on track to meet that target.

"We continue to see the business adapt as it delivers expected improvements in profitability and addresses areas of concern," Campbell said. "The new initiatives are progressing and the business continues to explore acquisition growth options internationally which would be incremental to the $30 million target." 

The board declared a 9 cent dividend, with a April 7 record date, payable on April 14.

The company's earnings increased across all reporting segments. Its New Zealand rentals posted a net profit of $7,000 for the first half, turning around a loss $859,000 in 2015, with earnings from the tourism group in New Zealand up 39 percent to $2.3 million.

United States rental profit gained 61 percent to $5.68 million, with revenue from sales of goods up 52 percent to $22.7 million, and sales of services up 49 percent $16.9 million. Australian rental profit rose 2.2 percent to $3.1 million

The shares last traded at $2.54, and have gained 16 percent so far this year.

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