Tourism Holdings Limited (THL) is cutting its spending and fleet size in the USA after poor FY2019 results.
The New Zealand-based tourism, campervan rental and sales company is lowering FY2020 capital expenditure in the USA by US$40m.
It is also reducing its fleet size for both campervan companies Road Bear and El Monte RV for the period.
THL chief executive Grant Webster says despite the current market conditions, the company’s USA performance for FY2019 to date “is unacceptable”.
He says the company “should be able to deliver regardless of what the broader market conditions are doing, given [THL’s] relatively small size compared to the total size of the market.
“We’ve had a detailed review and have a clear plan, which has commenced at pace.
“Given today’s market conditions, we expect that our USA FY2020 result will also be impacted.
“However, there is nothing which indicates our fundamental build/buy, rent and sell model is broken or that we have a poor business.
“We do not see the current performance being a long-term issue.
“We have reviewed our company strategy and remain confident in our direction despite these immediate USA issues.
“We are extremely focused on getting the USA business back in shape,” Webster says.
Around 80 new vehicle purchases initially intended for Road Bear in FY2019 will remain in a storage facility.
A number of organisational changes in the USA have also been made including the appointment of former Road Bear owner Daniel Schneider to the role of executive director of USA operations.
A number of factors impacted THL including a declining USA vehicle sales market, the company says.
It estimates the wholesale market is down 40% by volume and the retail market down 10% by volume compared to the same six-month period the previous year.
This has led to margin pressure as a result of heavy discounting from retailers, manufactures and rental companies.
THL reaffirms its previously stated FY2019 net profit after tax guidance of between NZ$25m to $28m.
