Tourism Holdings likely to exceed 2016 guidance as margins improve

By Sophie Boot

Tourism Holdings said it can maintain a dividend payout ratio "at the higher end" of its policy.
Tourism Holdings said it can maintain a dividend payout ratio "at the higher end" of its policy.

Tourism Holdings will likely exceed its 2016 guidance as margins improve in New Zealand and Australia, giving the campervan rental company confidence to predict growth over 2017 and 2018.

The Auckland-based company brought forward it projection for reaching annual profit of $30 million by a year to 2018, and said it would "meet and likely to some extent exceed" its earlier guidance for the year ending June 30, 2016, of $24 million, which would be up from last year's $20.1 million profit.

"The FY16 peak season in Australasia has performed to expectations, with continued positive inbound visitors," Tourism Holdings said. Rentals in New Zealand and Australia were flat on 2015, but growth was driven by improved utilisation and yield lift in both countries, it said.

The company anticipates rental growth and increased yield in 2017, particularly in New Zealand. It expects the British and Irish Lions rugby tour in late June and July that year to have a positive impact on results in the period, though will incur some increased costs to prepare its fleet.

Tourism Holdings said it can maintain a dividend payout ratio "at the higher end" of its policy, which is between 75 and 95 percent of net profit. In 2015, its payout ratio on net profit was 85 percent, and it said given its current capital expenditure program it expects to pay out about 90 percent in 2016.

The company's peer-to-peer motorhome rentals division, Mighway, has met initial expectations, and the company is increasing its investment to scale it in New Zealand and explore international expansion.

It's also increasing its 'flex-fleet', which is short-term inventory it sells after the peak season, to offset the reduction of its core fleet.

"The business model for THL is changing to being more flexible and customer focused," the company said. "There is a very significant amount of internal change which is being managed carefully as we grow."

The shares last traded at $2.63, and have gained 20 percent this year.

- BusinessDesk

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