Tourism Holdings profit falls by half to $29m

Tuesday, 27 August 2019

Tourism Holdings is trialling electric campervans, but the 120km range is proving challenging.

Tourism Holdings has announced a 52 per cent fall in after-tax profits to $29.8 million from the previous year, and embraced a sustainable theme called 'Future-Fit Business'.

Chairman Rob Campbell said last year's profit included a one-off gain of $23m.

While the directors were not satisfied with the results they were still 'very confident' in the future of the business and its competitive position.

The report highlighted comments from climate change experts about record temperatures and Campbell said it was why Tourism Holdings was prepared to act more aggressively at the risk of being accused of 'greenwashing', or using it as an excuse not to pay dividends when profits drop.

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The Waitomo business was marginally down as growth in visitor numbers slowed generally in New Zealand.

One of the main reasons for the profit fall was declining sales of rental vehicles - 34 per cent down in the US, and 15 per cent down in Australia, offset by 8 per cent higher sales in New Zealand, although short of targets especially for minivan sales.

Vehicle sales was the key issue. Total sales for the year were down 515 on the 2408 sold in 2018. The situation was different in the separate markets

Overall revenue from all divisions was down 1 per cent to $423m for the year ending June 2019.

'Broader economic conditions are uncertain, but we are yet to see those play out in any concerning manner within our rentals businesses.'

Rentals New Zealand forward bookings remained up on last year and the rental vehicle sales market appeared consistent. The number of vehicles being imported into New Zealand appeared to be slowing, which was positive, the company said.

Rental vehicle income in the US was also down.

'In the US business we continue to see slow dealer sales. We have planned for a lower demand in 2020 and expect that the US result will be down on this year as we continue to clear excess fleet.'

Income from the company's Waitomo business fell to $41.4m from $41.8m last year as growth in visitor numbers slowed in the tourism market generally.

The Kiwi Experience backpacker division saw significant falls in backpacker arrivals from Europe year, prompting cost reductions and marketing initiatives to promote new product lines.

Tourism Holdings has a half share in Action Manufacturing, which posted a net profit before tax of $1.5m, down 46 per cent due to costs developing new vehicles and a move to new premises. Half-owned Just go had a net profit after tax of $243,000, up 20 per cent.

Tourism Holdings paid a final dividend of 14 cents a shares bringing the full year dividend to 27cents a share, the same as 2018.

The company's new commitment to sustainability includes 23 goals that include reducing waste and greenhouse gases, as well as fair and ethical treatment of workers.

'We have some clear goals to reduce carbon emissions, as the largest single impact we see that needs addressing with urgency.

'This is where the greatest research and development effort is being targeted. We have 10 electric vehicles in New Zealand and other trial product, including re-powering and new build electric vehicles from a base glider chassis - a cab and chassis supplied with no engine or drive train.'

The 10 electric motorhomes, called the Britz eVolve, come with itineraries that have charging station locations and are available from the Mangere and Queenstown branches.

Tourism Holdings is installing 25 charging units in North and South Island holiday parks to help get around any problems with sufficient range.