Tourism Holdings says annual earnings fell 11 percent to $14.6 million on weak demand in Australia
Tourism Holdings [NZX: THL], which merged its campervan rental business with two rivals last year, posted an annual profit at the lower end of its forecast range as weak demand in Australia weighed on earnings.
Earnings before interest, tax and financing costs fell 11 percent to $14.6 million in the 12 months ended June 30, compared with the company's forecast of $14 million to $16 million. Sales rose 12 percent to $224.6 million, the Auckland-based company said in a statement.
Tourism Holdings has expanded its business in New Zealand, buying rivals United Campervans and KEA Campers, on the expectation it can reduce overall fleet numbers and improve margins. The company sold 432 units during the year at expected margins and expects its fleet rationalisation to continue in an orderly fashion, it said.
Earnings at the New Zealand unit remained unchanged at $5.5 million in 2013 as the company cut four fleet categories from its campervan operation, merged its two budget brands, outsourced its car rentals business and developed an RV Super Centre in Albany.
"We would expect New Zealand rentals to see double digit growth in hires" the company said. "Longer term, the reduction in industry capacity in the market should underpin earnings growth in the coming years to achieve acceptable returns."
In Australia, revenue fell 5 percent to $86.8 million and earnings dropped 68 percent to $1.3 million as tight economic conditions in Europe and a higher Australian dollar made the destination unattractive for tourists.
"Australia will remain tough in the coming year," the company said. "We expect revenue to fall but operating earnings should improve as the fleet is rationalised and we reduce costs."
In the US, which is the company's largest campervan market, earnings increased 14 percent to $6.5 million. Tourism Holdings, which expanded to the US in December 2010 when it bought the existing Road Bear business, said the market is showing revenue growth in line with expectations.
Tourism Holdings expects to provide a forecast for the first half of its 2014 financial year at its annual meeting when it has more certainty about high season bookings.
Net profit fell 12 percent to $3.8 million in the 2013 year. The company said net profit is not directly comparable as the latest year includes $4.5 million of earnings from KEA and United and $1.4 million of merger costs, while the year earlier included a one-time $4.5 million earnings benefit from the Rugby World Cup.
The company will pay a final dividend of 2 cents a share on Oct. 24, taking the total to 4 cents, unchanged from the year earlier.