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Tourism Holdings doubles first-half profit as El Monte outperforms

Thursday 22nd February 2018

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Tourism Holdings, the world's largest recreational vehicle rental business, doubled first-half profit as it benefited from the acquisition of US campervan rental and sales business El Monte, which performed better than expected, and US tax changes.

Profit jumped to $22.8 million, or 18.1 cents per share, in the six months ended Dec. 31, from $11.3 million, or 9.4 cents, in the year-earlier period, the Auckland-based company said in a statement. Earnings were boosted by a one-time gain of $1.8 million due to US tax change regarding the way deferred tax is measured, while a drop in the US federal tax rate to 21 percent from 35 percent reduced tax in the period by $2.3 million.

Revenue rose 43 percent to $209 million, including $29 million in rental revenue and $15 million in vehicle sale revenue from the El Monte business bought in January 2017. 

Tourism Holdings is expanding its campervan business globally and boasts the largest fleet of RVs for rent and sale in Australia and New Zealand, the second-largest RV rental business in the US, a half stake in a UK motorhome business, interests in motorhome manufacturing and services, and tourism ventures. The new El Monte business exceeded expectations, producing earnings before interest and tax of US$7.2 million in the 2017 calendar year, ahead of a targeted US$6.6 million, the company said today.

"It is pleasing to see most of the core businesses continue to improve, as well as seeing the El Monte RV business outperform our expectations for the calendar year," said chair Rob Campbell.

Tourism Holdings expects full-year profit of between $55 million and $59 million, including one-time items such as the gain from the way deferred tax is now measured in the US, and the expected gain from the creation of its RV services joint venture with US RV manufacturer Thor Industries. Excluding the one-time items, it forecast profit of $36 million to $40 million. That compares with 2017 full-year profit of $30.2 million.

In the company's interim report to shareholders, Campbell and chief executive Grant Webster said the outlook for all operating markets into the 2019 financial year "is currently positive", although noting that there appears to be "greater price sensitivity" and increases in yield achieved broadly by the industry over the last two year "will likely stabilise".

"Competitor activity is as we had expected and, pleasingly, any fleet growth in markets seem to be well aligned with increases in demand," they said.

Tourism Holdings increased its debt to buy El Monte but said it was paying that back faster than originally planned. Net debt for the business increased to $178 million at Dec. 31, from $103 million in the previous corresponding period, but below the forecast of $200 million. 

"The outlook remains positive and we will continue to grow in a sensible but global manner," Webster said.

In the US rental business, where Tourism Holdings operates the rental and sale of Road Bear, Britz and El Monte RVs, ebit jumped to $14.8 million from $5.6 million in the year-earlier period, as revenue rose to $92.2 million from $42.5 million.

The New Zealand tourism rental business, where the company operates the rental of Maui, Britz and Mighty motorhomes and the sale of motorhomes under the RV Super Centre retail brand, ebit lifted to $4.7 million from $2.6 million, as revenue advanced to $56.8 million from $49.4 million. The New Zealand tourism business, which operates the Kiwi Experience the Discover Waitomo Group, lifted ebit to $3.3 million from $3 million as revenue edged up to $18.3 million from $17.7 million. 

In Australia, where the company has Maui, Britz and Mighty motorhomes and 4WD vehicles and sells motorhomes under the RV Sales Centre retail brand, ebit advanced to $3.9 million from $3.7 million as revenue lifted to $41.7 million from $36.2 million.

Tourism Holdings will pay an interim dividend of 13 cents per share on April 16, up from 10 cents in the year earlier period.

The shares rose 0.8 percent to $6.09, up 57 percent over the past year.


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