KEY POINTS:
Tourism Holdings (THL) has reported half year net profit after tax (Npat) up 3.7 per cent to $4.9 million.
The result for the six months to the end of December was achieved on revenue from ordinary activities up 11.5 per cent from the previous corresponding period to $82.2m.
The result reflected continued growth in the Australian Rentals business led by a range of new products, and a rebuilding of the tourist car business in this country, THL said today.
A fully imputed interim dividend of 5 cents per share will be paid, the same as a year ago.
Last year the company was the target of a failed takeover offer from Australia's MFS Living and Leisure Group at an offer price of $2.80 a share.
MFS Living and Leisure got to 83 per cent of the shares in THL but let the bid lapse because it was short of the 90 per cent sought.
Yesterday THL shares closed at $1.94, having been as low as $1.75 last month.
THL's half year operating profit before taxation was up 1.4 per cent to $7.4m, with tax down 6.4 per cent to $2.02m.
Trading Npat on a like-for-like basis - excluding non-recurring items and discontinued businesses - was up 6 per cent to $5.1m.
THL's directors said they believed 2008 would be a challenging year for the New Zealand tourism industry, driven by the impact of declines in the global equity and debt markets.
That was exacerbated by the high New Zealand, while the strength of the euro in relation to the US dollar made the US an attractively priced destination for Europeans.
The customer cost of fuel surcharges from Europe to New Zealand was, in some cases, the same value as a short-haul package holiday, THL said.
It expected trading Npat for the full year in the range of $16m-$18m which was similar to last year, with an overall bottom line Npat including non-recurring items and discontinued businesses of between $15m-$17m, which was ahead of last year's $13m.
In the latest half year trading in the Rentals division was pleasing in the first quarter, with marketing initiatives to maximise yield.
Trading remained strong in Australia in the second quarter, although the Rugby World Cup had some impact, THL said.
Some evidence was seen of over-supply and heightened competitive activity in the New Zealand industry, driven by companies entering the rentals business with second-hand imported vehicles.
"These have put pressure on yields in the short-term but are clearly unsustainable where companies are under-capitalised, and this is likely to lead to consolidation," THL said.
The Tourism Leisure Group - which includes attractions such as Kelly Tarlton's operations in Auckland, the Waitomo Glowworm Caves and Milford Sound Red Boats - performed below expectations.
That was due to a continued decline in the Japanese market and a drop in the British and Korean markets, which softened the start of the tourism season in New Zealand, THL said.
A soft start to the New Zealand tourism season was reflected both in visitor numbers and their associated spend.
In addition, numbers continued to be affected by a trend, evident from previous years, for expanding airline capacity to drive stronger growth into the June half-year.
Costs continued to increase across much of the business due to volatile fuel prices, a tight labour market, wage rates and one-off costs arising from the strategic change process, THL said.
- NZPA
