Swelling visitor numbers help lift Tourism Holdings profit

The campervan rental sector is sitting in a sweet spot with weaker kiwi dollar and cheaper oil supporting international travel, leading to a 45% lift in Tourism Holdings [NZX: THL] first half profit.

 The company has also upgraded its full-year profit forecast.

Net profit rose to $8.2 million in the six months ended December, from $5.6 million a year earlier.

Earnings before tax rose 44% to $13.7 million on a 14% rise in revenue to $88.8 million.

Tourism Holdings lifted its forecast for annual profit to about $24 million from a previous estimate of $22 million, up from 20.1 million in 2015, which chief executive Grant Webster says reflects "the positive operating environment for tourism here in New Zealand and overseas. The peak season is well underway and operating to plan," he says.

"From a debt perspective, the company is operating well within its own benchmarks. We have changed the manner in which we report fleet capex spend to provide improved investor understanding of how we have created more flexibility in the business model."

Tourism Holdings has improved earnings across its businesses by selling off excess fleet capacity and focusing on margins, and is looking to leverage earnings from New Zealand's booming tourism market to fund growth in the international motorhome market.

Last August, the company said it was targeting annual profit of $30 million by 2019 from its existing businesses, and would use its flexible balance sheet to make value-adding acquisitions.

Chairman Rob Campbell today says the company is on track to meet that target. "We continue to see the business adapt as it delivers expected improvements in profitability and addresses areas of concern," he says.

"The new initiatives are progressing and the business continues to explore acquisition growth options internationally which would be incremental to the $30 million target."

The board declared a 9c dividend, with an April 7 record date, payable on April 14.

The company's earnings increased across all reporting segments. Its New Zealand rentals posted a net profit of $7000 for the first half, turning around a loss $859,000 in 2015, with earnings from the tourism group in New Zealand up 39% to $2.3 million.

United States rental profit gained 61% to $5.68 million, with revenue from sales of goods up 52% to $22.7 million, and sales of services up 49% $16.9 million. Australian rental profit rose 2.2% to $3.1 million

The shares last traded at $2.54 and have gained 16% so far this year.

(BusinessDesk)