Tourism Holdings upgrades result, expects RWC boost

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Tourism Holdings has upgraded its forecast for the current year to an operating profit from break-even and expects a big jump the following year, partly due to the impact of the Rugby World Cup.

The company now expects earnings before interest and tax (EBIT) of $4 million for the year ending June 30, for a net loss of $1.4 million, beating its previous forecast $4 million loss, before writing off $27 million in goodwill relating to its Australian and New Zealand rental businesses.

The bottom line net loss is expected to be about $28.4 million.

It expects EBIT will jump to $17 million and net profit to $6 million for the year ending June, 2012.

Tourism Holdings' shares plunged in early February after it said a "severe and sudden drop" in forward bookings in January would turn its expected profit for the year ending June from the $2.5 million forecast last December to a $4 million net loss.

Today, Tourism Holdings said its vehicle sales volumes and margins in the US have improved since it bought the Road Bear business in December and it now expects a small EBIT profit from that business.

Its New Zealand rentals business has also improved because more people are using motor homes after the February 22 earthquake in Christchurch.

The company said it has decided to completely write off the goodwill relating to its Australian and New Zealand rental businesses, based on the updated forecasts.

"The board emphasises that the charge is non-cash and the write down does not affect any of THL's bank covenants as these are all measured excluding intangible assets," it said.

The improvement expected for financial 2012 reflects the likely impact of the Rugby World Cup on the New Zealand rentals business, a full-year contribution in the US and the absence of acquisition costs associated with Road Bear's purchase, and reduced fleet-related costs in Australia.

However, the company said demand in Australia in the six months ended December is likely to be lower than the same period a year earlier because of the high Australian dollar.

Tourism Holdings is planning to buy the building in Hamilton which houses its CI Munro motor home-building business from the Hamilton City Council for about $7.3 million.

"The proposed acquisition is earnings accretive," Tourism Holdings said.

Documents relating to the partial takeover offer by Ballylinch, a company associated with Switzerland-based businessman John Sheffield Grace, are expected to be posted on or before Monday, May 30, it said.

Ballylinch is offering 67.5 cents a share to take its stake to more than 50 per cent from 19.4 per cent.

Tourism Holdings' shares surged in mid-April after the Ballylinch offer was announced and were unchanged from Friday at 72 cents in early trading today, well above the 55 cent low hit in February.