Tourism Holdings Limited (THL) has reported net profit of NZ$13.1 million for the FY20 first half to December 31.
This was down 25% compared to the $17.5m profit posted in the same period the previous year.
The New Zealand-based tourism, campervan rental and sales company says its results were impacted by a weak US vehicle sales market and ongoing investment in its digital platform Togo Group.
Vehicle sales revenue was down 6% to $59.1m while rental and service revenue was up 3% to $148.4m.
Underlying profit (EBIT) was down 11% to $31m and net debt was down 20% to $181m. It’s interim dividend was down 23% to 10 cents per share.
THL chief executive Grant Webster says the company has “a strong balance sheet and market position”.
“Thus we have confidence in the future of THL despite the difficult trading environment in some markets at present.
“The teams globally are intensely focussed on performance and delivery in every aspect of the business,” he says.
The company maintains its expectation for full-year net profit of around $24m. This factored in a forecast reduction in Chinese inbound tourists from February through to April 2020 due to the Covid-19 containment measures.
“The global situation with Covid-19 continues to remain uncertain, however at this stage we do not consider there to be any additional information that causes any change to our assumptions,” the company says.
“The impact of this event has been greatest in the Waitomo business.
“The Australian bush fires did create cancellations in late January and February, but the greater concern was the lower forward bookings from the long-haul markets. We have since experienced a rebound and do not expect the impact to be material to the total business in the remainder of this financial year.
“We will provide a further update to the market prior to our FY20 annual results announcement in August,” it says.
New Zealand
The EBIT for New Zealand rentals and sales was up 6% from the previous period to $7.5m. It saw growth in both rentals and vehicle sales. Rental revenue was up 5% to $40.5m with growth in hire days and yield. Vehicle sales revenue increased 14% to $25.8m, with growth in sales volumes as well as margins.
Australia
The EBIT result for Australia was up 7% to A$8.2m Rental income was up 4% to A$35.6m, with strong growth in hire days offsetting a small reduction in yield due to increased competitive pricing. Vehicle sales revenue fell 9% to A$7.2m due to a shift in the mix of vehicles sold towards smaller RVs.
Total vehicle sales improved compared to the previous period due to growth in average sales margins on consistent vehicle sales volumes.
THL expects the majority of the impact from the Australian bush fires to be in the second half of the year. As a result, H2 FY20 rental revenue is expected to be below H2 FY19.
USA
The EBIT result for USA was down 35% to US$8m for the heal-year period. In NZD terms, rental revenue was 4% up, to $52.4m due to favourable movements in the NZD:USD exchange rate. However, at the USD level, rental revenue remained in line with the previous period at US$33.9m.
An improvement in hire days was offset by a decline in average yield.
Vehicle sales revenue declined by 23% to US$16.1m. The decline was driven
by a 37% drop in average sales margin, which is partly due to a greater number of vehicles being sold through wholesale channels. The total number of vehicles sold in the half was 351, down 12% compared to 400 in the previous period.
Action Manufacturing
Action Manufacturing, New Zealand’s largest vehicle manufacturer half-owned by THL, delivered a positive result compared to the previous period.
THL’s share of profit before tax in the half was $1.4m, compared to $0.6m in the previous period.
The prior result included the transaction and integration costs for the acquisition of refrigerated truck body and trailer manufacturer Fairfax Industries as well as other planned expenses relating to new brand and product development.
