Level 2 move dampens trust’s profit optimism

The Invercargill Licencing Trust is down $7.2 million in the first quarter of the financial year, compared to the equivalent period last year, because of the effects of the Covid-19 pandemic.

Total sales for the year to date (April to July) were down 24 per cent, chief executive officer Chris Ramsay says in a report presented to the board at a meeting this week.

After the meeting, Ramsay said the trust reported better than expected sales figures in June and July, hitting a record profit before tax of $974,000 in July, but the change in alert levels in August had dampened any tentative optimism.

July’s results were buoyed by the wage subsidy, restaurant and bar operations, and retail bottle store sales, he said.

Higher sales at bottle stores resulted in a sales increase of 3.2 per cent in July, compared to July last year, to $243,000, but this was offset by fewer liquor distribution sales, particularly in Central Otago, because of a lack of international tourists.

ILT’s accommodation arm remains the hardest hit by the effects of Covid-19, although Ramsay said the 9.4 per cent – or $90,000 – drop in accommodation income in July, compared to the equivalent month last year, was actually smaller than the trust expected.

Its hotels and motels were welcoming domestic tourists, but not enough of them coming to Southland, he said.

The ILT conference and events arm was also buckling under yo-yoing alert levels, which had dented confidence for event organisers.

It had been starting to make ‘‘good traction’’ through June and July but lost a number of conferences and events after the move back to alert level 2 was announced on August 11.

They weren’t big events, but would have produced high-volume sales, Ramsay said.

Some event organisers had rebooked, but many were holding off.

Ramsay said it had discovered during the past few months that it could break even at alert level 2, but would lose money in alert level 3 or higher.

ILT was also reliant on Air New Zealand’s direct Auckland flights, which would be essential for regional regrowth.

The flights had been suspended while Auckland was in alert level 3.