The world's largest motorhome rental company, Tourism Holdings, says the outlook for New Zealand and Australian tourism is strong as it posted a record EBIT half year result, while slightly easing its full year forecast.

Operating profit for the core business before interest and tax (EBIT) was up 4 per cent on the previous period last year at $34.7 million, with 6 per cent growth in rental and services revenue but a 14 per cent decline in vehicle sales income, attributed to a challenging US sales market.

Net profit after tax was down 23 per cent at $17.5m, which the company said reflected an increased loss of $5.4m in its digital investment venture TH2, compared to a loss of $2.4m in the same period in 2018.

The company said net profit after tax for the full 2019 financial year was now expected to be around $32 million, down from previous guidance of $32m-$34m.

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Investors clipped 6 per cent off THL's share price on news of the eased guidance, taking it to $4.35.

Chief executive Grant Webster said the New Zealand rental and sales business had record EBIT growth of 7 per cent on the previous period, boosted by last year's Lions rugby tour.

Forward rental booking demand in New Zealand and Australia for the second half of the year and into the next was strong, suggesting a continuing strong outlook for tourism despite some uncertainty about the growth rate for international tourism.

The lowered net profit forecast was due to US vehicle sales being lower than expected, and much higher than anticipated costs around a merger and acquisition that didn't go ahead, Webster said.

An interim dividend of 13c per share was steady on the same period last year. The company intends to declare a fully dividend of 14c per share in line with last year.

It said the half year results reflected a general decline in the global vehicle sales market, but in recent weeks there had been signs of improvement and this was expected to continue in the second half of the year.

Competitive price pressure in the US rentals market continued but the company said it had strong forward rental bookings.

The $5.4m loss from the investment in TH2, a global digital joint venture with North America-based Thor Industries, the world's largest RV or motorhome maker, last year was flagged last year.

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Webster said the total cash investment in TH2 to date was less than $20m.

As already signalled, the TH2 loss for the full year would be around $15m "maybe a little less", he said.

The digital business was not expected to be in the black for about another two years.

TH2 is the home for digital assets from THL and Thor and includes THL's digital route planner Roadtrippers.

More than 50 per cent of THL's revenue comes from overseas. As well as in New Zealand and Australia, it operates in the US, UK, South Africa and Japan and is aiming to expand into Europe, Canada and China.

Webster said North America was THL's main large scale market for development and once the company was confident it was on track there it would launch into Europe.

Craigs Investment Partners' senior research analyst Mohandeep Singh said the first half earnings were "pretty solid" but a little below analysts' expectations.

The slight change down in guidance was not far from the average analysts were expecting but the share price fall reflected some nervousness about the tougher operating environment THL had flagged, especially in the US, he said.

Singh said the share price had been under pressure since last year when the company announced it would make a $15m loss on the TH2 venture and was eyeing mergers and acquisitions which suggested it would need more capital on top of existing debt on its balance sheet. Net debt at December 31 was $226m, against $178m last year.

While TH2 was "more blue sky thinking" and not part of THL's core business, on the company's earnings a $15m loss was a 30 per cent downgrade, which had helped pull down the share price from nearly $7 last year, Singh said.

More recently the pressure had increased with market concern about the outlook for tourism, underlined by Air New Zealand in reducing its earnings outlook on a forecast of slower passenger growth, he said.

Chairman Rob Campbell said the THL business was not only growing but changing in scope and structure.

"We are taking the build/buy-rent-sell model in our RV business to wider geographies.

"At the same time we are extending the scope of what we offer the global market."


HY/FY 2019 HY/FY2018

Revenue $144.3m $136m
EBIT $ 34.7 $ 33.3m
Net profit $ 17.5m $ 21m
Dividend 13cps 13cps