THL cutting costs to stay in black
The Rugby World Cup gave Tourism Holdings Limited a one-off boost, but the campervan company plans to cut costs to keep its balance sheet in the black.
The $4.2 million half-year profit announced yesterday marked a turnaround in the listed company’s fortunes, after wearing a $1.3m loss in the same period the previous year.
In the six months to December, THL’S New Zealand Rentals branch lifted ebit (earnings before interest and tax) to $2.9m, up from a $3.5m loss year-on-year.
Chief executive Grant Webster attributed much of the upswing to the world cup, when the New Zealand fleet of more than 1000 campervans had come ‘‘pretty close’’ to being booked out.
Revenue also climbed 27 per cent to $108m, as the company’s new Road Bear fleet in the United States performed better than expected over the US high season.
Webster was ‘‘very pleased’’ with THL’S investment in Road Bear, which had allowed it to take advantage of strong revenue growth in the US tourism market.
‘‘It’s a very hot destination at the moment, because the US dollar is staying low,’’ he said.
But the downside of the feeble greenback was a slump in European visitors closer to home, felt particularly sharply in Australia, where rental revenue was down $0.9m on the previous period to $45.8m.
‘‘As that aussie dollar keeps climbing, it’s very, very tough,’’ Webster said. ‘‘It’s created that perception in the core European markets – quite rightly – that Australia is expensive.’’
To drive profit growth for the rest of the year, the company plans to cut costs and slash the size of its New Zealand fleet, which it had kept during the Rugby World Cup period.
‘‘That’ll give us a lower fleet going into next year, which will save vehicle costs, save depreciation and so- forth‘‘, Webster said. Similar measures would be taken in Australia.
The THL board’s expectation that profits would keep rising has spurred the company to resume paying dividends, declaring 2c per share to be paid out next month.
Chairman Keith Smith said the board had forecast net profit for the full year would be between $5m and $6m, while ebit would be between $16m-$17m.
‘‘The board is encouraged by the performance of the business at present, in an operating environment that continues to be very difficult‘‘, he said.
Meanwhile, the company’s joint venture to begin building rental vehicles in New Zealand with Kea Manufacturing, announced earlier this week, would not affect the second half forecast.