Severe revenue drop hits Tourism Holdings

Friday 4th February 2011 2 Comments

Tourism Holdings (THL) is expecting it will not be in compliance with banking covenants for the March quarter, after a "severe and sudden drop in revenue" last month.

The company also said it will now not achieve full year earnings guidance provided to the market in early December.

For the full year a loss of $4 million is now being forecast, compared to the $2.5 million net profit previously forecast, while earnings before interest and tax are now expected to be at breakeven level rather than the $10 million previously expected.

THL said it had started talks with its bankers, Westpac and ANZ, about the banking covenants.

Westpac and ANZ have been the company's bankers for many years and once their review of updated forecasts was complete the market would be updated. The issue was expected to be addressed before the end of February, THL said.

The half-year result to December 31 would be in line with previous forecasts and was in compliance with all banking covenants as at that date.

"However a severe and sudden drop in revenue intakes (forward bookings) during the key January booking month has created significant uncertainty for the remainder of this financial year," the company said.

Factors included natural disasters, including the recent Queensland floods, and a greater than anticipated decline from the British market.

"Exacerbating the issue of lower hire days, yields for the February to June period are down on expectations as the industry reacts to the demand decline with severe price activity."

Based on the current year end projections, a dividend would not be declared for the half year.

THL provides holiday rental vehicles under the Maui, Britz, Backpacker and Explore More brands, and operates manufacturing company Ci Munro, Kiwi Experience and the Discover Waitomo group which includes the Waitomo caves.

NZPA

Comments from our readers

On 5 February 2011 at 12:12 pm Howie said:

Yeah right! Pay top dollar for an america outfit last month, now the wheels have fallen off. Share price has collapsed. Not our fault says Smith. That man has the kiss of death about him.Wightsons,Skellerup, Warehouse! Thankfully they seem to recover when he goes. Meanwhile you have to take up the inevitable rights issue else you get really robbed. Howie

On 5 February 2011 at 3:13 pm Mark said:

Is It possible world cup has created this tempory void of booking!