Big drop in Tourism Holdings net profit

Tourism Holdings' result reflects the tough times facing the global travel and leisure industry.

Tourism Holdings reported an 80 per cent fall in full year net profit to $2.9 million, reflecting hard times for the tourism industry.

The net profit for the 12 months to the end of June included gains of $4.3m from the sales of business and compared to last year's result of $14.3m.

Businesses sold included Kelly Tarlton's and Milford Sound Red Boats, along with a shareholding in InterCity Holdings.

From continuing operations, Tourism Holdings reported a net loss of $1.4m, compared to a profit of $7.6m the year before.

While disappointing, the trading loss reflected general trading conditions within the tourism industry and included costs of $1.6m before tax from redundancies and restructuring of the business in response to the environment, the company said.

Tourism Holdings operations include vehicle rentals, the Waitomo Caves and Kiwi Experience.

Total operating revenue for the year slipped 2 per cent to $169.3m, while trading revenue edged up 1 per cent to $138.9m.

For the second half trading revenue was up 4 per cent on the prior corresponding period, Tourism Holdings said.

It had a strong balance sheet, but given the current trading profitability and the ongoing uncertainty in markets, the board considered it in the best interests of the company not to declare any dividend now.

Operating highlight of the year was an increase in earnings before interest and tax from tourism operations, mainly Waitomo and Kiwi Experience, to $3.9m from $3.2m in 2008.

The rentals business, which hires campervans and cars and includes the Maui and Britz brands, recorded revenues unchanged from the previous year at $137m.

Costs rose by $17m, resulting in ebit of $9.4m compared to $26.4m the year before.

Growth in market share of hire days was achieved partly through additional marketing to the growing low-end consumer segment through the Explore More brand.

But operating costs in the division had been climbing in recent years, and while hire days had been growing yield increases had not matched the higher cost s, Tourism Holdings said.

Vehicle-related repairs, including accident damage and write-offs, rose by $4m on a like for like basis.

That increase reflected a combination of supplier cost increases, higher accident rates and higher fleet numbers, particularly cars.

At Ci Munro, which manufactures motor homes, campervans, caravans and other special purpose vehicles, the full year loss of $3.6m compared to a loss of $5.1m for the prior year.

The second half result improved, with a loss of $400,000 compared to a loss of $5.2m for the corresponding prior period.

Remaining tourism businesses, including the Waitomo Group, Kiwi Experience and Fiji transport businesses, reported ebit of $3.9m compared with $3.2m a year earlier.

Uncertainty remained about the level of tourist arrivals, Tourism Holdings said.

Arrival growth for New Zealand and Australia for the 2010 year was down from previous market forecasts, with the forward book profile for Tourism Holdings suggesting those indications were generally realistic.

That led to an expectation that arrivals from the company's source markets would fall by 3 per cent to 5 per cent.

Tourism Holdings' share price was down 2c to 54c around noon, having ranged between 40c and $1.51 in the past year.

- NZPA