Tourism Holdings says annual net profit to fall about 14%

Tourism Holdings expects its profit to be down $3.9 million from a year before. Photo / File

Tourism Holdings' shares fell nearly 11 per cent after it warned annual net profit will be down about 14 per cent.

The company's shares opened at $2.50 from yesterday's close at $2.80.

Earlier, Tourism Holdings said it expects annual net profit will be down about 14 per cent because of the coronavirus impact on Chinese tourism, the Australian bushfires and the previously advised problems in its US business.

The company said it currently expects net profit for the year ending June will be about $24 million, which compares with the $27.9 million it reported for the year ended June 2019.

"The primary factors in the update include the previously disclosed USA vehicle sales weakness, the Australian bush fires cancellations and forward booking reduction, a forecast reduction in Chinese inbound customers over the next two months due to the coronavirus containment measures and ongoing investment in Togo group," the company said in a statement.

Togo is its joint venture with Thor Industries, the largest RV manufacturer in North America, to create a global technology platform for travel services from bookings to fleet management.

"We continue to assess the impact of these factors and our response," the company said.

"There is positive momentum in many areas of the business. New Zealand and Australia have had solid performances in vehicle sales from both a volume and margin perspective," it said.

Recent activity in the US at consumer shows for vehicle sales "has been positive and provides greater confidence of margin and volume recovery going into full-year 2021. The performance over recent months in the rentals and tourism segments had been broadly in line with expectations prior to these events."

The company had warned at its annual shareholders' meeting at the end of October that its annual net profit would probably fall but said then that it wouldn't provide specific earnings guidance because of the degree of uncertainty and volatility it was experiencing.

At that point, analysts had been forecasting a $31.8 million net profit for the current year.

Last week, chief executive Grant Webster told BusinessDesk that the company had yet to feel any impact of the coronavirus at the operational level but that the part of the business most exposed to Chinese visitors is its Waitomo Caves attraction.

The main New Zealand-based campervan business, which mostly relies on customers from Britain and Europe, hasn't been affected, Webster said then.

In the 2019 financial year, US rentals accounted for 21 percent of earnings before interest and tax, Australian rentals for 18.2 percent and the tourism group, which includes the Waitomo Caves, for 20 percent.

Tourism Holdings' shares ended last year at $3.45 and had been trading at $3.57 the day before the AGM profit warning.

The company has been widely viewed as one of the most exposed to the economic impact of the coronavirus crisis.

- BusinessDesk