Tourism Holdings shares fell more than 9 per cent after it said its US business is still failing to fire with average vehicle sales margin down 40 percent in the first quarter from a year earlier.
"As part of the preparation for its 2019 annual meeting, thl has reviewed its FY20 financial forecast and concluded that if the most recent trend in the USA market continues throughout the remainder of FY20, it is likely to have a material impact on thl's FY20 net profit compared to market expectations," it said. The rental RV operator's annual meeting is slated to take place on Wednesday.
The stock dropped to $3.74 - the lowest since September 4 - and has shed around 20 per cent over the past 12 months.
"Investors are pretty concerned given that the company has had to continually downgrade future earnings. That is putting significant pressure on Tourism Holdings' share price," said Grant Williamson, a director at Hamilton Hindin Greene.
"It's been a rough ride for shareholders in Tourism Holdings since they expanded into that US market and obviously the more downgrades, the more confidence investors lose."
The company said it would not be providing full-year earnings guidance at the meeting due to the current "uncertainty and volatility" in the US, and said that if the market dynamics continue net profit excluding one-off items would probably be lower than the prior year's result of $27.9 million. That result was already down 26 percent on the prior year.
Hobson Wealth adviser Brad Gordon said the market consensus was for earnings of around $31.8 million and "now it looks like will be under last year's $27.9 million. The share price had baked in that better outcome."
Tourism Holdings said US vehicle sales by units were in line with the prior year. However, margins shrank due to some large volume discounts in the wholesale market, and general retail price pressure, it said.
The company said it's "taking active steps to manage fleet and sales at all levels, and we consider that the business is performing well on a comparative basis."
In May, the company completed a review of its US business after what it called an unacceptable performance in the 2019 financial year. As a result, it started to shrink the fleet and rein in capital spending in an effort to lift return on capital employed.
Outside of the US, the company was more upbeat. Rental forward bookings across all businesses for calendar 2020 were up year to date compared to the 2019 calendar year, it said.
Vehicle sales in New Zealand and Australia were broadly in line with expectations, it said.