THL half year results:
Revenue - $80m down 7pc
After tax profit - ($300,000) down 106pc
Dividend - none
KEY POINTS:
Low booking numbers mean tourism businesses are offering more and more specials and creating a spiral of competition and pricing volatility, says Tourism Holdings, as it posts a half year loss of $300,000.
The group, which includes Waitomo businesses, Kiwi Experience and operations in Fiji, performed well given
the economic climate, producing an ebit results for the six months to December 31, 2008, in line with the previous December half, it said today.
However, the tourist industry was facing a tough 2009, it warned.
With the tourism industry under pressure globally, competitive dynamics are changing and structural shifts were likely to follow.
The year 2008 started with industry pressures including oil price peaks and airline fuel surcharges and New Zealand was under pressure as a long-haul destination.
With the onset of the global financial crisis, these issues were replaced by noticeable reductions in consumer confidence, increased price activity and a reduction in global tourism demand.
With decreasing demand, many largely fixed-cost operators had entered into severe price competition.
This is changing consumer buying patterns as they chase "specials" and delay purchase decisions based on the news of the day.
Tourists purchasing direct from tourism operators at the last minute - often arriving at destination with no pre-booked activity.
Meanwhile, the New Zealand market was currently over-supplied in rentals and is under yield pressure.
The company's expectations for the second half-year were for hire days to drop by 10 per cent over for the previous December half, and for yields to decline between 5 per cent and 10 per cent.
Features of Tourism Holdings six month results:
- Revenue for the period, at $80m, was down 7.3 per cent.
- Net Profit After Tax (Npat) loss of $300,000 vs profit of $4.9m for the prior period.
- Debt reduced $16m over the 12-month period.
- Caravan and motorhome manufacturer Ci Munro EBIT loss of $3.2m.
- Tourism businesses Waitomo and Kiwi Experience performed well.
- $46m cash received from asset/business sales.
- Operating Cash Flow was negative $27.6m, compared with negative $7.8m in the previous December half-year.
The asset sales programme further strengthened the balance sheet, with the $46m cash generated being used to upgrade fleet and pay down debt.
Tourism Holdings sold Kelly Tarlton's for $13m , its Milford Sound businesses for $17.5m, the remaining 49 per cent shareholding in Intercity Holdings for $9.5m, the Kiwi Experience fleet to Johnston's Coachlines (JCL), settlement of the Airbus business sale and settlement of the JCL residual share sale, totalling $11m .
No interim dividend was declared.
Balance sheet management continued to be a focus for the company.
"The non-payment of an interim dividend reflects the current focus on reducing debt and recognises the expectation of low trading profit through the remainder of the financial year."
Net debt reduced to $68.5m at December 31 - $16.1m below the figure the previous year.
The debt to debt plus equity ratio (net of intangibles) improved to 34 per cent at December 2008, from 35 per cent at June 2008 and 39 per cent at December 2007.
With the reduction in debt and lower interest rates, interest expense reduced by 30 per cent to $2.3m, from $3.3m.
- NZPA