No surprise at lower THL result

By Phil Boeyen, ShareChat Business News Editor

Tuesday 27th February 2001

Tourism Holdings (NZSE: THL) has lived up to lower expectations in delivering a half-year profit 13% below the previous year.

Although the company's sales jumped 20% to $115.6 million, including a full period of trading revenue from its Britz motorhomes purchase, profit for the six months ended December fell $1 million to $6.6 million

Earlier this month THL issued a profit downgrade, lowering its full-year forecast from $21 million to between $14 and $16 million.

The biggest blow for the company has come from its motor rental business in Australia, which expected a boost from the Sydney Olympics.

"The indications are that the disruption to normal visitor flows caused by the Sydney Olympics, particularly to our key German market, has had a definite impact on this year's trading performance," says chairman Keith Smith.

However Mr Smith says the Australian situation has now started to firm, and long term the profile and prestige associated with the Olympics will have a positive impact on the tourism industry.

In New Zealand, revenue for the six month period increased $11 million to $75 million compared with the previous year.

Although not up to expectations, the company says it was a positive result in light of such adverse factors as rising fuel prices and light snowfalls at South Island ski areas.

Keith Smith says the company is hoping for improvement in its rentals business in Australia and New Zealand now it is under the control of a new chief operating manager, Ken Crawford.

"Mr Crawford's history of operations management, sales and marketing activities and his strategic alliances with international wholesalers and airlines will strengthen our long term relationships."

He says a marketing drive is under way to expand market share in the United Kingdom, the USA, Asia and the emerging markets of Italy and France.

Despite facing a grumpy market following two recent profit downgrades, Mr Smith says the outlook for the group remains positive. He says the company's balance sheet strengthened during the latest half-year, with debt reducing by $39 million to $103 million.

"The reduction in debt means THL is in a strong position to take advantage of the continuing upturn in tourism in the Australasian market, including a programme of continuous fleet enhancement."

THL plans to match last year's interim dividend payment of 4 cents per share.

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