Tourism Holdings misses forecast

By Phil Boeyen, ShareChat Business News Editor

Wednesday 29th August 2001

Tourism Holdings' (NZSE: THL) under-performing Australian operations have weighed down its full-year profit, which has dropped 12%.

For the year ended June the tourism operator made $13 million, down from $14.84 million last year.

In February the company said it expected to return a profit of between $14 and $16 million for the year but says it missed this figure mainly as a result of ongoing soft trading in Australia, particularly in the disposal of used motor homes.

On balance the latest figures show that New Zealand operations traded 11% up on the previous year but Australian businesses were 49% down on the 2000 result.

Despite the problems across the Tasman, THL says Australia remains a key focus for future expansion.

Turnover jumped 9% to $200.5 million, including a full 12 months revenue from the acquisition of the Britz motorhome business. However earnings before interest and tax were $29.1 million, 12% below last year.

THL says its NZ operations benefited from the general growth in tourism

Its experiences division, which includes attractions such as Kelly Tarlton's in Auckland, Waitomo Glow Worm Caves, and Treble Cone, increased turnover by 13% to $49.4 million and returned Ebit of $9.6 million, 28% up on the previous year.

The coaching division saw a 15% drop in Ebit to $5.2 million on slightly lower turnover of $40.6 million, suffering from flat revenue and major rises in operating costs in its charter business.

Since balance date the company has combined its coaching business with its experiences division, hoping to benefit from cross-selling opportunities and cutting some costs.

The company is now planning to focus on the premium coach market and will sell a third of its Johnston's coaches which operate in what it says is a highly competitive 'three star' market.

In Australia, THL Rentals and Oz Experience operations suffered from the negative impact of the Olympics, the post introduction GST impact on tourism and in particular the disposal of used motor home and the Australian economy going into a recession.

"Currency devaluation also affected both New Zealand and Australia where long term implications for tourism are good but in the short term THL, along with the rest of the industry, was adversely affected with major rises in the costs of fuel, tyres, motor vehicles parts and the higher costs of fleet replacement," the company says.

The company says costs for its THL Rentals business were much higher than planned due to major increases in fleet maintenance, vehicle relocation costs and wages. Ebit fell by 18% to $28.8 million.

The THL Rentals businesses is made up of motor homes under the brands of Maui and Britz in both Australia and New Zealand, rental cars in Australia and New Zealand, vehicle disposal operations in Australia and New Zealand and a New Zealand-based motor home manufacturing business.

"The past year has featured problems associated with the merger of the Britz and Maui businesses which proved to be a much greater task than we had planned for and poor trading conditions in Australia.

"A combination of these factors led to unacceptable financial performance and inadequate customer service and operational service issues. We have resolved each of these issues and believe that the major problems are now behind us."

THL says despite a disappointing financial year, it remains committed to being a leading regional tourist operator and believes the outlook for future trading in Australia and New Zealand is very positive.

"Both countries continue to appeal to our target market particularly in the Northern Hemisphere and Japan due to the spectacular and contrasting scenery. Equally we foresee major visitor growth to New Zealand from Australia, our largest single market."

It reports forward bookings, particularly in its rentals and coaching operations, are up on previous years.

The company says positive cashflows and a confident outlook means have helped to keep the final payout at 5 cents per share, bringing the year's total to 9 cents, the same as last year.

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