Tourism Holdings doubles interim profit in bumper season

By NZPA

Wednesday 26th February 2003

Tourism Holdings Ltd (THL) made the most of New Zealand's booming tourism industry last year, doubling first half net profit to $5.2 million.

THL, New Zealand's largest tourism operator, increased profit for the six months to December despite a drop in sales revenue to $88.8 million ($96.4 million).

The company boosted cash flows, sold assets and reduced debt during the period.

As a result THL will pay an interim dividend this year of 4c per share on April 11, after failing to do so last year.

While the profit bettered the previously forecast $4 million, analysts warned that the uncertain outlook for international tourism could hurt the company.

The downturn in tourism numbers in the fallout of September 11, 2001 and the Ansett collapse the same year took a severe toll on its Britz and Maui motor home rentals and various coach tours.

During the reporting period, the company's operating cash flows of $18 million, plus $13 million in cash from the sale of The Helicopter Line, Mount Cook Skiplanes and Treble Cone Skifield, enabled THL to continue reducing debt.

THL cut debt by 26 percent, or $20 million, to $56.2 million and reinvested $21 million into new plant and equipment.

Excluding one-off items, THL's $4.3 million profit was 43 percent higher than the $3 million reported for the same period the previous year.

"THL will continue to take a prudent approach to debt and cash management, to allow THL to realise growth opportunities or ride out any downturn in tourism sparked by terrorist attacks or other external shocks," chairman Keith Smith said.

In that vein, the board decided to postpone a possible capital return or share buyback "... in light of current uncertainties created by the high probability of an Iraq war, possible future international terrorism attacks, and potentially the North Korean situation".

THL stood by predictions of a full-year profit after tax of up to $8 million providing forward bookings remained at current levels.

"The New Zealand tourism industry has bounced back to pre-September 11 levels while the Australian market continues to be depressed after the collapse of Ansett Australia, the terrorist bombings in the United States, and the possible direct Australian military involvement in the Middle East," Mr Smith said.

"Nevertheless, we are committed to our long-term strategy of building on the strength of our tourism businesses in both Australia and New Zealand."

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