Tourism Holdings reversed a full-year loss to a $6 million pre-tax operating profit today but says the performance lags long-term expectations given the funds employed.After one-off tax adjustments, profit from continuing businesses was $5.0m for the year
Tourism Holdings reversed a full-year loss to a $6 million pre-tax operating profit today but says the performance lags long-term expectations given the funds employed.
After one-off tax adjustments, profit from continuing businesses was $5.0m for the year to June 30 – a 457% gain on its $1.4m loss the previous year.
Revenue rose 8% to $182.3 million with net debt falling to $36.5m from $57.8m, providing an equity ratio of 62%.
Tourism Holdings is the largest provider of holiday rental vehicles in New Zealand and Australia, including the Maui, Britz, Backpacker and Explore More brands and also operates Kiwi Experience and Discover Waitomo.
Chairman Keith Smith said the company had successfully focused on internal operational issues over the past 18 months to align the business to the visitor environment and the balance sheet was strong.
Earnings improved across all its business units except Rentals New Zealand.
Current performance and booking trends saw a softening of the backpacker and UK markets, in particular, while the strength of the New Zealand and Australian dollars was also contributing to lower on-the-ground spend once visitors arrived.
Tourism Holding is another company reluctant to provide an earnings outlook this reporting season.
Mr Smith said the lead-up to October 31 was a key booking period for rental operations and it was not in a position to provide appropriate guidance for the year.
Instead, an update on first-half trading would be provided at the company’s annual meeting in November.
He did say the 2011 financial year was expected to show minimal growth from rental revenue and visitation perspective.
On a positive note, bookings were returning to more traditional lead-time level with customers once again booking earlier with growth in online bookings continuing – although travel disruption caused by the volcanic ash cloud over central Europe earlier this year appeared to have been one factor encouraging customers to return to traditional retail and wholesale agents, the company noted.
Earnings before interest and tax for Rentals Australia grew 51% to $7.4 million for the year.
Continued success in fleet sales was a highlight across the Tasman with more than 500 vehicles sold for the year, contributing $20 million in revenue – an increase of $8 million on the year earlier. Vehicles sales were expected to remain at these levels in the year ahead.
The more remote Fiji business had significantly improved performance to produce a record profit year in Fiji dollar terms.
“The Fiji environment remains challenging from a trading and operating perspective,” Mr Smith said.
While the $1.9 million ebit loss for its vehicle manufacturing company Ci Munro was an improvement on the $3.6 million loss for the same time last year, the business was on track to deliver positive earnings in the 2011 financial year.
Tourism Holdings warned although it was demonstrating positive momentum, the group required a higher return on the capital invested in the business.
The path to profit would be based on transforming the current customer offer, creating new opportunities for growth to leverage the fixed cost base and adapting the business model to improve margins of the rentals business.
Tourism Holdings was forced to sell the Kelly Tarltons oceanarium in Auckland as the local inbound tourist market dried up during the global recession.
A final dividend of 2 cents per share brought the year's total to 4cps – representing 80 % of the year's continuing businesses net profit after tax.
The company paid no dividend last year.
Shares in Tourism Holdings were trading up 2c today at 79c, having traded at between 54c and $1.01 this year.
