THL optimistic but realistic
Tourism Holdings has managed to keep its revenue stable in the first half of the year by selling down its campervan fleet as Covid-19 wiped out the international travel market that underpinned the business.
However, that wasn’t enough to prop up profits, and the company yesterday posted a loss of $1.8 million for the six months to the end of December, from a profit of $13.1m in the year-earlier period. Revenue slipped 1 per cent to $205.8m, as money from rentals fell 50 per cent to $64.8m, while vehicle sales jumped 132 per cent to $137m.
To bolster the business during the biggest single challenge the company has faced in its history, Tourism Holdings is selling more campervans, with 1786 vehicles sold in the half, 89 per cent more than it sold in the same period the previous year.
It has used that money to pay down debt,paying off about $106m during the half, bringing net debt down to $22m.
‘‘Tourism Holdings has reduced debt significantly, in particular over the last six months, and is positioned well to face uncertainty,’’ said chairman Rob Campbell. ‘‘The manner in which we operate the business and the decisions we make today are critical to the longterm positioning and success of Tourism Holdings.’’
Chief executive Grant Webster said the company plans to increase its debt to about $90m over the remainder of the financial year as it re-invests in new fleet, given the volume of vehicles recently sold. ‘‘We have confidence that we can sell vehicles to generate a profit, based on the sales performance over the last 12 months.’’
The company has agreed to acquire the half interest in vehicle manufacturer Action Manufacturing from its joint venture partner for $9m. Some $7.5m of the payment will be in Tourism Holding shares issued at $2.30 each, and the remaining $1.5m paid in cash.
The manufacturer suffered a 2.6 per cent decline in pre-tax profit to $700,000 in the half as Tourism Holdings pulled back motorhome production and that trend is expected to continue for the remainder of the year. However, the business is expected to recover as Tourism Holdings builds up its fleet again to meet rental and sales demand, the company said.
In New Zealand, domestic rental revenue surged more than 500 per cent in the first half, but that wasn’t enough to offset the loss of revenue from international tourists, which normally makes up between 90 and 95 per cent of its business here. As a result, total revenue in New Zealand slumped to $14.6m from $40.5m in the equivalent period last year.
In Australia, rental revenue fell to $14m from $37.7m as domestic travel was hurt by interstate travel restrictions in place across most of the half. However, the company believes the Australian rentals business can be profitable in a domestic environment with no travel restrictions.
One bright spot has been the company’s United States business, which increased pre-tax profit 34 per cent to $16.6m. That market has been helped by a bigger population and less concern around motorhome travel in Covid times – motorhomes, seen as ‘‘Covid cocoons’’, have risen in popularity.
Rental revenue in the US slipped by a lesser amount than other markets, falling to $36.2m from $52.4m, and the company said domestic bookings achieved higher yields although were for a shorter time.
’’While we consider that our result for the half has been positive in the circumstances, particularly within our USA business, we are realistic about the losses that we will be incurring in the remainder of 2021,’’ Webster said.
‘‘Tourism Holdings . . . is positioned well to face uncertainty.’’ Chairman Rob Campbell