Tourism Holdings beats first-half guidance on NZ tourist assets, flags full-year profit surge

Wednesday 26th February 2014

Tourism Holdings turned to a profit in the first half, beating its guidance, as improved New Zealand tourism returns made up for a weaker Australian performance. The shares jumped to the highest in more than five years after it said full-year profit would soar 175 percent.

Earnings before interest and tax rose 36 percent to $7.2 million in the six months ended Dec. 31, from $5.3 million a year earlier, the company said in a statement. Net profit was $2.5 million, from a loss of $466,000 a year earlier. Sales climbed 3.5 percent to $112.3 million.

The Auckland-based company, the largest holiday vehicle rental business in New Zealand and Australia, bought kiwi rivals United Campervans and KEA Campers in 2012 to reduce overall fleet numbers and improve margins. In November it gave guidance that first-half earnings would grow 25 percent, as it saw the benefits the merger and a stronger performance in its US market, which generated 88 percent of EBIT in the period.

The shares rose 9.5 percent to $1.15 and earlier touched $1.20, the highest since 2008, as the company said full-year profit would rise to $10.5 million from $3.8 million. Tourism Holdings will pay an interim dividend of 5 cents per share, up from 2 cents a year earlier.

In 2007 shareholders rejected a takeover bid by Australian company MFS Living and Leisure when the shares were at $2.80.

The company's tourism division, which includes its Kiwi Experience backpacker bus service and Discover Waitomo group, reported a 16 percent gain in first-half sales to $10.3 million as New Zealand benefited from record tourist numbers, while earnings more than doubled to $1.7 million. It expects strong second-half growth for the unit.

Rentals New Zealand was the biggest division by revenue, up 31 percent to $38.4 million, and narrowing its EBIT loss to $2 million from a loss of $2.2 million a year earlier as the company bedded in its merger.

Rentals Australia sales declined 20 percent to $38 million and EBIT dropped 24 percent to $2.6 million, hurt by a high kiwi dollar and challenging market conditions. The company cut costs, reducing funds in the division by 21 percent to $71 million.

"The approach to rectifying the Australian result is working and we remain confident in achieving an appropriate return on capital over the next 18 months," chief executive Grant Webster said. "All parts of the business have growth planned for the financial year and are performing in line with those plans."

Rentals USA, which includes the Road Bear campervan business, lifted first-half sales by 12 percent to $25.6 million while EBIT slipped to $6.3 million from $6.4 million.

Fund manager Milford Asset Management has upped its holdings in the company to 19.1 percent. The fund manager became a substantial holder of the stock after buying the bulk of Utilico Investments' stake.

BusinessDesk.co.nz

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