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Tourism Holdings returns to profit

Thursday 23rd February 2012

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Tourism Holdings, the largest provider of holiday rental vehicles in New Zealand and Australia, returned to profit in the first half after an increase in sales from the Rugby World Cup and first high season profits from its Road Bear unit in the US.

Profit was $4.2 million in the six months ended Dec. 31, from a loss of $1.3 million a year earlier, the company said in a statement. Earnings beat brokerage First NZ Capital’s expectations of $2.5 million. Sales rose 27 percent to $108 million.

“The Road Bear business has continued to benefit from increased numbers of tourists visiting the USA and a positive tourism exchange rate,” said chairman Keith Smith. “The year-end Road Bear result is expected to be earnings before interest and tax of over $5 million.”

Shares in the company are currently up 3.2 percent at 65 cents.

Road Bear continued to beat expectations, contributing to 20 percent of the group’s total sales increase over the past six months. In New Zealand, the rental market recovered due to an increase in sales from the RWC though the business still remains focused on cutting costs and increasing add-on sales revenue.

Tourism Holdings, whose brands include Maui, Britz, Backpacker and Explore More expects profit for the full year to be in range of $5 million to $6 million.

“The tourism businesses in New Zealand continue to be affected negatively by the reductions in visitation from core European and United Kingdom markets and from general coach markets declines still being experienced throughout the country,” Smith said. “There is some growth from Asian markets, and focus remains on delivering products to attract more of that customer base.”

On Tuesday, the company announced a joint venture with campervan and motorhome designer and manufacture, Kea. Under the venture Tourism Holdings will sell its specialist body work business into the JV and the Motek Specialist Vehicles business will revert to the name of Action Motor Bodies.

The transaction will see $7.5 million in assets transferred from Christchurch-based Tourism Holdings to the new company. It is not expected to have any negative impact on the firm’s full-year earnings before interest and tax results for the business.

The board has declared a dividend of 2 cents per share to be paid on March 27.


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