KEY POINTS:
Tourism Holdings has reported full year net profit up 7 per cent to $14.3 million, with a strong performance from its Australian motorhome operation.
That was offset by a disappointing result from vehicle builder Ci Munro during its move from Otorohanga to Hamilton, the company said today.
The trading net profit for the June year from continuing businesses was down 11 per cent to $13.3m, with operating revenue up 9 per cent to $151m.
A fully imputed final dividend of 6 cents per share is to be paid, taking the total dividend for the year to 11cps - the same as the year before.
During the year Tourism Holdings rationalised its non-core business through the sales of Johnston's Coachlines, Airbus Express, Kelly Tarlton's and its Milford Sound assets.
It sold and hired back the Kiwi Experience coach fleet and created the InterCity joint venture, as well as relocating the Ci Munro factory.
The year started with the distraction of a takeover offer and continuing through a lengthy selldown of non-core assets, the company said.
Tourism Holdings was now more concentrated on its core discipline of tourism motorhomes and car rentals, its growing youth and discount brands and the development of Waitomo as a destination.
The global credit crisis and volatility in the price of oil were likely to deliver a challenging 12-18 months for the tourism industry.
In the short term, intense pricing pressure was likely in this country as the market competed aggressively for a more price sensitive clientele, the company said.
Over time, tighter credit markets would lead to more sensible pricing, with a reduction expected in the number of tourism operators and in fleet sizes as the rental sector continued to tighten.
The group's rental forward book was 9 per cent behind the level for the same period of the previous year.
"Over all, our products and destinations are well positioned for the growth in arrivals that will come from stabilising oil prices, the increase in capacity from the introduction of more fuel-efficient wide bodied aircraft on long-haul routes, and the revaluation of the New Zealand dollar," Tourism Holdings said.
In the latest year, the company's rentals division, excluding Ci Munro, achieved earnings in line with those for the previous year, at $28.2m. Revenue grew 4 per cent to $112m but the growth was offset by cost increases to leave earnings before interest and tax (ebit) flat.
Rentals Australia had good revenue growth, helped by a strong domestic economy, while rental car revenue from Europe also recorded good growth.
Results from New Zealand rentals continued to be affected by yield pressure from aggressive competitor pricing and an ongoing market over-supply, Tourism Holdings said.
"The over-supply was more apparent in the second and fourth trading quarters as prices moved downwards in response to a decrease in visitor arrivals."
Despite that, Rentals New Zealand had a strong lift in rental car hire days as the business moved from a new vehicle lease model to full ownership of good quality vehicles, allowing more competitive pricing.
Ci Munro's ebit loss of $5.1m had been treated as a non-recurring item due to the dislocation to production caused by the move from Otorohanga.
The transition was more difficult than anticipated, and was exacerbated by external supplier failures which delayed production numerous times during the year, the company said.
This year would be one of consolidation and focus to clear a backlog.
For the continuing businesses of the Tourism Leisure Group (the Waitomo operations, the Fiji operations, Kiwi Experience and Explore More Rentals), trading ebit for the continuing businesses was $1.8m compared with $4.3m for the previous year.
Operating results continued to be affected by rising costs and the decline in Japanese and Korean markets.
Tourism Holdings shares closed at $1.42 yesterday, down from a high of $2.48 last October.
- NZPA
