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Tourism Holdings lifts 1H profit 38%, maintains annual profit forecast

Tuesday 21st February 2017

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Tourism Holdings, the campervan rental company, lifted first-half profit 38 percent with strong tourist demand in New Zealand and Australia, and said it will at least deliver its forecast annual profit of $27 million.

Net profit rose to $11.3 million in the six months ended Dec. 31, 2016, with revenue rising 9 percent to $146 million, the Auckland-based company said in a statement. The company maintained annual guidance for 2017, but said it will "continue to drive the business to exceed that expectation and treat the $27 million as a minimum deliverable."

Tourism Holdings has set a goal for $50 million in profit by 2020, which it says is based on conservative top line growth expectations. It is forecasting gross capital expenditure of $175 million in the full year, and $118 million in vehicle sales, with the latter recognising an increase in sales from its US Road Bear operation, flex fleet sales and the inclusion of sales from US campervan rental and sales business El Monte Rents which it bought for $91 million effective on Jan. 1.

"We have growth and improvement plans for the existing businesses, a clear action plan for El Monte and clarity on the strategic direction of the company as we continue to build our position as a global leader in the RV industry," the company said. "There are areas for improvement and we continue to challenge ourselves, stretch ourselves and focus on continuous delivery to publicly declared goals."

Tourism Holdings said global political events like Brexit and the US presidential election had created some uncertainty, with risks of volatility in consumer confidence or exchange rates, but to date it hasn't seen a material change in bookings.

In the six months to December, New Zealand rental revenue rose 16 percent to $49.4 million, while tourism revenue advanced 17 percent to $17.7 million. Australian rental sales dipped 0.1 percent to $36.2 million, while US rentals rose 7.3 percent to $42.5 million. The US rental segment has the highest return on funds employed in the business, posting the biggest net profit of all the segments at $5.6 million, while the NZ rental segment reported net profit of $2.6 million and the Australian segment $3 million.

Tourism Holdings said El Monte has started "on track" with its expectations, with no impact on the first half results, and it will report the new acquisition separately to its Road Bear operation in its full year results.

The board declared a 10 cents per share dividend, with an April 3 record date, payable on April 13. It's also putting in place a dividend reinvestment plan where shareholders can reinvest their dividends in new shares, based on the five-day, volume-weighted average price after the record date with a 2 percent discount. Details will be sent to eligible shareholders in early March.

The shares last traded at $3.88 and have gained 52 percent in the past 12 months. The stock is rated a 'buy' on two analyst recommendations compiled by Reuters, with a median target price of $4.20.

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