Southern Travel H1 profit up 4%, but outlook difficult

By NZPA

Tuesday 4th March 2008

Southern Travel boosted first half profit by 4% following the purchase of outbound travel company The Walshe Group in July, but forecast an annual loss.

For the six months ended December 31, net profit totalled $273,000 on the back of revenue of $15.8 million, up 7.7%.

The company would not pay a dividend, and warned that a full-year dividend was unlikely.

"The Japanese inbound business has continued to decline, and while a drop in revenue was expected, the fall has been greater than predicted," chairman Rodney Walshe said.

"This decline is industry wide and is not a problem suffered by STH alone."

Despite a management shake-up, and expectations of a good year for the Walshe division, further falls in Japanese tourist numbers meant the group was unlikely to post a full-year operating profit before unusual items, Walshe said.

However, the company had no interest-bearing debt, had positive cash flow, and adequate funds to streamline some operations and expand inbound operations to ease dependence on a declining Japanese market.

Shares in Southern Travel last traded on February 25 at 32c.

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