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Tourism Holdings turns to 1H profit

Wednesday 24th February 2010

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Tourism Holdings, the campervan rental company that was dropped from the NZX 50 Index last year, remained profitable in the first half of the financial year amid an upturn in trans-Tasman visitor numbers.

The net profit was $1.4 million, or 1.3 cents a share, in the six months ended December 31, compared to a loss of $265,000 a year earlier, the company said to a statement. It boosted its revenue 15% to $92 million, that’s two-thirds of its full-year income last year. Tourism Holdings’ made an operating profit before financing costs of $3.1 million compared to a loss of $4.4 million in 2008.

The result “reflects the turnaround of THL’s manufacturing business, which is expected to return to profitability in the 2011 financial year,” said chairman Keith Smith. “The New Zealand market has clearly benefitted from the increased focus of visitors from Australia to maintain volume. Whilst inherently beneficial, the downside of this market is shorter visits and thus often higher operating costs and lower yields.”

Tourism Holdings was forced to sell assets such as Kelly Tarlton’s Underwater World, amid the global recession which sapped demand for inbound tourism. Last year, the government and Air New Zealand Ltd. launched a successful $5 million joint marketing venture to lure Australians across the ditch which Prime Minister John Key estimated would bring in some $60 million into the economy.

The shares were unchanged at 96 cents in trading yesterday, and have jumped 20% this year, well ahead of the NZX 50’s 3.1% decline. The company announced a final dividend fully-imputed of 2 cents a share.

Smith said the company expects to make a full-year profit of between $3 million and $4.5 million, including a tax investment allowance of $1.4 million. It also expects capital expenditure of $23 million to $27 million this year, and between $55 million and $60 million next year based on growth in its Australian fleet.

“The 2010 calendar year should be a stable one for the industry as a whole, although there still appears to be a lack of capital investment in many segments,” he said. “The 2011 calendar year is expected to be more positive, with benefits of the additional funding and refreshed direction from Tourism New Zealand, and the obvious benefits of the Rugby World Cup.”

The company’s revenue was driven by a 44% boost in underlying earnings to $6.5 million in its Australian rentals and a tripling of earnings in its NZ Tourism unit to $1.9 million.

The New Zealand rentals business made a bigger half-year loss at $2.1 million in the six months through December, compared to a $1.6 million in 2008, though it cut its loss on its CI Munro unit to $1.5 million from $3.2 million a year earlier.

Businesswire.co.nz

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