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Tourism Holdings focused on US turnaround

Tuesday 27th August 2019

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Tourism Holdings expects tough US market conditions to spill over into this year but said things remain positive in Australia and New Zealand despite "uncertain"  economic conditions.

The largest issue for the year was the significant fall in vehicle sales in the US market, the company said. "This had an impact on the total FY19 result for thl and has consequential impacts in FY20." 

However, forward bookings for the New Zealand and Australian businesses remain positive compared to the prior year and the first trading month of FY20 has been positive for both those businesses, it said. 

"The broader economic conditions from our perspective are uncertain. However, we are yet to see those play out in any concerning manner within the rentals business," it said. 

The rental RV operator said its net profit was $29.8 million in the year to June 30, down 52 percent on the year. The prior year result was boosted by a $23.1 million gain related to the formation of the Togo Group, formerly branded as TH2.  

Net profit excluding non-recurring times was $27.9 million, at the top of the $25 million to $27 million forecast it has said it would "comfortably exceed," but down 26 percent on the year.

Earnings before interest and taxation, excluding one-offs, were $62.1 million, down 2 percent on the year. Of that, $37.8 million was generated in New Zealand, $13 million in the US and $11.3 million in Australia. 

Total revenue was down 1 percent to $434 million.  

“The board is not satisfied with the result for FY19, which is down on the prior year. We remain very confident in the future of the business and our competitive position within the market. We have a strong balance sheet and our global growth strategy remains in place," said chairman Rob Campbell. 

It will pay a final dividend of 14 cents a share, payable on Oct. 11 to shareholders on the register at Oct. 2. 

The stock last traded at $3.62 and is down 29 percent so far this year. 

In US dollars, US rental revenue was down 3 percent, vehicle sales revenue was down 33 percent and ebit was down 41 percent. 

"Trading conditions and thl performance within the USA market has been the greatest area of concern in the last 12 months. This market is a key priority for us in the new financial year, and we are well under way with the implementation of our USA review conducted earlier in 2019," said chief executive Grant Webster. 

Regarding the US review, it said fleet purchases for FY20 will be on track or lower than the expected $23.8 million it previously signalled. It has announced the closure of two sites and is in the process of reviewing others. 

However, its FY20 result will be lower "as we will be holding higher fleet numbers due to the much lower sales volumes in FY19," it said. 

In New Zealand, in kiwi dollars rental revenue was up 11 percent, vehicle sales revenue was up 8 percent and ebit lifted 23 percent. Looking ahead, the outlook for FY20 remains positive, with an expectation of positive rental revenue growth, some vehicle sales growth and development of ongoing efficiencies in the business. 

In Australia, rental revenue was up 7 percent, vehicles sales revenue was down 12 percent and ebit lifted 6 percent, all in local currency.  The company noted a slowdown in broader tourism growth and said "we are expecting single digit revenue growth and some vehicle sales growth." 

It is formally launching a plan to becoming a "future-fit business," which includes 23 goals that more broadly measure the business but cautioned "we know this is a journey; we know we can’t change everything that we want overnight."

The goals include all energy coming from renewable sources, operations emitting no greenhouse gases, and employees being paid at least a living wage. 


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