Tourism Holdings says profit will fall this year

Tuesday 11th November 2008

Tourism Holdings, New Zealand's biggest campervan rental company, said profit will fall this year as consumers cut back on discretionary spending and tourist numbers weaken.

Net income in the 12 months ending June 30 will be "well below" last year's $14.3 million, Chairman Keith Smith told shareholders at their annual meeting today. The company expects to report a "small trading loss" for the first half, based on current bookings and weak first quarter, he said.

"We expect a very challenging second six months as well," Smith said.

Tourism Holdings has sold assets including its coach services, Kelly Tarlton's, Milford Sound facilities and Discover New Zealand tour unit to focus on its campervans in the past 12 months. The sales raised $69 million, bolstering the company's balance sheet as it repaid debt and giving it more scope to make acquisitions.

Still, the global economic slump has prompted the company to abandon work on expanding into new markets such as the US, Smith said.

"The outlook is challenging," he said. "Governments around the world are making strenuous efforts to shore up the financial system so as the limit the impact of the fallout from the credit crisis on economic growth. It is not yet clear how successful these moves will be."

Shares of Tourism Holdings fell 2.2% to 88 cents and have tumbled about 60% this year, twice the decline of the NZX 50 Index.

Summer bookings look "challenging," with New Zealand reservations down 13% and those in Australia down 9%, the company said.

The company will focus on cutting cost in the short term, it said.

By Jonathan Underhill

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