Tourism Holdings returns to FY profit on Road Bear, RWC

Monday 27th August 2012

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

Profit was $4.3 million in the 12-months ended June 30, from a year-earlier loss of $27.3 million, the Auckland-based company said in a statement. Sales increased 8 percent to $200 million.

"The positive result was driven by tight control of costs, operational improvements, the first full-year contribution from our USA motorhome business and a pickup in motorhome rental activity during the 2011 Rugby World Cup," chairman, Keith Smith said.

Shares in the NZX-listed company rose 3.5 percent to 60 cents. The stock is rated 'outperform' based on the consensus of three analyst recommendations compiled by Reuters. Tourism Holdings will pay a 2 cent dividend on Oct. 26.

Earnings before interest and tax rose 173 percent to $16.3 million. Road Bear continued to beat expectations contributing $5.7 million to ebit, while $4.5 million came from New Zealand's RWC rentals. In Australia ebit improved 48 percent to $4 million reflecting a lower cost base after a reduction in fleet and sales mix.

"The USA is benefiting from a lower currency and also has the promotional power of the new marketing campaign, 'Brand USA' which has a significant marketing budget," Smith said. "The outlook remains positive for the USA to continue to regain market share that was lost through the last decade."

The Australian market holds "some uncertainty" for the group with strong competition for both international and domestic tourists from the US, Smith said. New Zealand is expected to see "declines from our core markets segments over the coming year" as visitation and spend numbers continue to decline.

Further guidance on the full-year 2013 outlook will be released at Tourism Holdings annual general meeting.

BusinessDesk.co.nz

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