KEY POINTS:
Tourism Holdings plans to split the business into four parts, after reporting first-quarter sales on budget and profit expected to rise this year.
Chief executive Trevor Hall, speaking at yesterday's annual meeting, said the listed tourism operator - which runs attractions including Kelly Tarlton's - had more than 30 brands and as a result struggled to achieve market clarity.
To tackle this the firm would be split into four companies: Rentals, CI Munro, KX Group and Tourism Leisure Group.
"These will reduce our time to market, help us to take advantage of emerging distribution and marketing trends, and provide quicker integration when we make acquisitions," Hall said.
The biggest challenge facing the company was the use of information technology - in particular rapid changes in market distribution and the impact of the internet on how people made purchases, Hall said.
"We are seeing the marketplace change before our eyes," he said. "THL needs to be at the forefront in offering customer choice in purchase points whilst continuing to support and focus on our traditional agent and wholesale networks."
The company was not well-positioned for the changes already under way and needed to lift its investment in the online environment, he said.
"Speed to market will be a key driver of business growth, as is speed of change to compete with ongoing innovation," Hall said.
Chairman Keith Smith said first- quarter trading - traditionally the weakest - had been on budget, with the first half in line with last year's net profit of $4.2 million.
"At this stage we expect a trading result for the full year within the range forecast by the various analysts of our stock, that is, for $15 million to $18 million net profit after tax," Smith said.
This would be an increase on last year's net profit of $11 million, which was down from $15.3 million from the year before.
Restructuring was expected to generate one-off costs, Smith added.
A write-down of Kelly Tarlton's had hit last year's net profit by $3.7 million.
"Additional factors in the 2006 year were substantial increases in fuel and energy prices and the flow-on impact on airfares into New Zealand," Smith said.
The exchange rate, which had remained relatively high for most of the year, and the emergence of new short-haul destinations were factors affecting the number of international visitors into New Zealand - down 4 per cent in the year to June.
"In the short term, all of THL's divisions will be influenced by a number of factors including visitor numbers, high fuel costs and airline surcharges," Smith said.
"There might be some offset if the New Zealand dollar remains at levels slightly below those of the 2005 [calendar] year."
Hall said other challenges facing the company included a need to take a stronger advocacy role within the industry and the importation of old, end-of-life vehicles which were undermining the quality of the tourism sector.
There was also urgency required in Government policy to improve access to seasonal workers if the growth in visitor numbers was to continue.
Shares in THL closed down 1c to $1.81 yesterday.
