THL
25/02/2015 08:54
HALFYR
PRICE SENSITIVE
REL: 0854 HRS Tourism Holdings Limited
HALFYR: THL: THL 6 Months Result Release Dec 2014
25 February 2015
MEDIA | NZX RELEASE
TOURISM HOLDINGS LIMITED (thl)
FINANCIAL RESULTS FOR SIX MONTHS ENDED 31 DECEMBER 2014
GROWTH ACHIEVED, $17M FULL YEAR FORECAST
HIGHLIGHTS:
- Operating Profit Before Financing Costs and Tax (EBIT) of $10.6M up $3.4M
or 48% on the prior corresponding period (pcp)
- Net Profit After Tax of $5.6M versus $2.5M for pcp
- Interim dividend of 7 cents per share (cps) declared versus 5 cents for pcp
- Net Debt decreased to $85M down $12M on the pcp
- FY15 year end NPAT forecast confirmed at greater than $17M
- Strategic financial goals set at the Annual Meeting are well on track
thl today announced a half year profit in line with updated expectations
released to the market in December.
Chairman Mr Rob Campbell said: "We continue to deliver on the expectations we
have provided shareholders. Further earnings improvements will be achieved in
the current operations. We are now addressing appropriate smart growth
opportunities. We are already the global leader in self drive RV tourist
experiences and there are further opportunities to increase the scope and
value of this industry segment globally. thl will remain very focused on
growing earnings and flexible capital utilisation."
The business also confirmed it anticipates at least $17M Net Profit After Tax
for the FY15 financial year.
Chief Executive Officer Mr Grant Webster said: "We are operating in a
positive tourism environment and have addressed the core operating issues
within the business. We are employing new capability and enabling the
business to grow in a smart manner. It is pleasing to see the company on
track for the increased year end forecast we released in December.
It's also pleasing to see shareholders rewarded with an increased interim
dividend of 7 cents per share."
ENDS
NZX: THL (Tourism Holdings Limited)
FINANCIAL AND OPERATIONAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2014
This report has been based on the unaudited accounts which have been prepared
in accordance with New Zealand equivalents to International Financial
Reporting Standards (NZIFRS).
Current Year NZ$m; Up/down %; Previous corresponding year NZ$M
Total Operating Revenue $109.7M; Down 2%; $112.3M
Operating Profit before tax $9.5M; Up 99%; $4.8M
Less tax on operating profit $3.9M; Up 67%; $2.3M
Profit after tax attributable to members of the listed issuer $5.6M; Up 129%;
$2.5M
Earnings per share from continuing operations cps 5.0 cps up 124%; (2.2) cps
7cps dividend declared fully imputed.
Record Date : 9th April 2015 (ex date 7th April 2015)
Payment Date : 16th April 2015
OPERATIONAL COMMENTARY
GROUP PERFORMANCE - Operating Performance ahead of plan
Group Revenue for the half year to 31st December 2014 declined 2% to $110
million from $112 million whilst group operating profit before financing
costs, joint venture earnings and tax (EBIT) increased to $10.6 million from
$ 7.2 million. The revenue decline was in line with the planned reduction in
fleet in Australia and New Zealand, lower USA fleet due to strong fleet sales
and planned lower vehicle sales in Australia and New Zealand. Revenue was
above internal expectations for the period.
The lower fleet numbers and subsequent reductions in revenue have now been
achieved and we have entered a revenue growth phase.
All businesses have an improved performance against the prior year in
underlying currency terms, though the USA was down in NZ Dollar terms. In
line with the commentary we provided last year the USA had lower peak season
rental income due to increased sales in H2 of FY14, but have recovered this
across the shoulder season. The USA business remains the most flexible
operating model.
The tourism businesses and manufacturing joint venture had strong revenue
growth and with strong operating leverage also showed positive margin
improvement.
MARKET CONDITIONS
Demand has continued to increase. The current high season has continued to
show positive growth over last year. December visitor numbers for our
Tourism Group were up over 20% and demand for motorhomes was firm in
Australia and New Zealand, though limited by capacity as planned. January has
been in line with last year (Chinese New Year was in January last year) and
February is on track for double digit growth again for the Tourism Group.
The USA and China have provided a larger proportion of the growth along with
visitation numbers from the UK that align with the increased consumer
confidence in that market.
All businesses also benefitted from the stronger consumer confidence in
Europe, especially Germany. thl does see a stronger correlation to consumer
confidence and visitation growth than any exchange rate impacts.
We are confident with the booking growth into next year for all businesses.
We will watch the increase in the NZD versus the AUD closely however we
believe the largest impact will be the translation of earnings from the
Australian business.
DIVISONAL SUMMARY
NEW ZEALAND RENTALS - Strong EBIT growth planned
The New Zealand rentals EBIT was up close to 46% on the pcp. Lower
depreciation arising from fleet reductions, and improved residual values from
improved vehicle build over recent years was the main contributor to improved
EBIT. Rental income was flat on last year with the lower fleet. Vehicle
sales margin was up on pcp due to improved margins per vehicle, despite lower
volumes sold.
The targeted improvement in FY16 is to achieve an acceptable return on
capital. The proof points are on track.
Vehicle sales for the period were on track with expectations. The RV Super
Centre in Albany continues to grow additional revenue streams in retail,
trades and recreational vehicle servicing.
Work continues on a new site in Christchurch in conjunction with the
Christchurch International Airport. The new site will encompass both rentals
and vehicle sales operations.
UNITED STATES RENTALS - Continued delivery - managing growth
The Road Bear RV business EBIT of $6.1M was marginally down on the $6.3M
achieved last year, though 5% ahead in US dollar terms. Lower fleet numbers
in the peak season due to strong vehicle sales in H2 FY14 resulted in lower
peak season rental income, however shoulder season revenue has been strong,
and vehicle sales have continued to perform well. 267 vehicles were sold for
the half versus 262 for the pcp.
We have increased the fleet by approximately 10% in the USA for this coming
high season (June to September). We are confident the second half of FY15
will show an improved result on FY14. Based on the current forward book we
expect to achieve further growth in FY16.
The management changes announced previously have been enacted and Daniel
Schneider is now a Director of the Road Bear RV business and consultant to
thl based in Switzerland. Hannes Rosskopf has assumed the responsibilities
for the operation of the business in the capacity as General Manager USA.
A new San Francisco site with greater capacity has been established and will
be operational for the coming high season.
We are currently exploring another new location option which we hope to
announce at the International USA travel trade event IPW in June.
AUSTRALIAN RENTALS - Still on track - revenue growing
The Australian Rentals half year EBIT of NZ$4.7M was up on last year by $2.1M
or 81%.
In AUD terms EBIT was A$2M ahead of last year. The main contributor to the
improved performance against last year has been lower operating costs
(A$2.2M) with the main savings coming from lower depreciation in line with
reduced fleet, repairs and relocation costs. These benefits have now created
a much stronger operating capacity within the business. The focus returns to
growth and ensuring that in the background of some economic uncertainty the
business is positioned to grow and deliver on the expectations of an
appropriate return this financial year.
Rental income was level with last year despite the lower fleet, with
reasonable yield increases. Vehicle sales margin was A$0.2M lower than last
year, with 114 sold against 164 last year.
TOURISM BUSINESSES - High positive operating leverage
The tourism businesses had a positive half year. EBIT was up at $2.4M from
$1.7M in the pcp.
Revenue was up 19% on the pcp. Pleasingly visitation growth was ahead of the
International Visitor Arrival (IVA) growth statistics for the same period.
The products in this portfolio are well managed and positioned in the market.
Both the Waitomo business and Kiwi Experience have good operating leverage.
Costs were well managed, and remain an ongoing focus across the business. The
new Kiwi Experience coaches have been well received by customers and are
providing positive fuel efficiencies and are contributing well to the
sustainability goals set for the business.
We are allocating resource within the business to new product development. We
expect growth in the second half over last year and will see further growth
in FY16 as the new products come on stream.
JOINT VENTURE MANUFACTURING (RV Manufacturing Group) - Turnaround complete,
growth focus
thl's share of profit in the joint venture business increased by over 55% on
the pcp. The efficiency gained in both the Auckland and Hamilton sites has
been pleasing.
Procurement improvements and design adaptations have continued to drive down
build costs. The targeted decrease in build costs for FY16 set by thl has
been achieved and will provide positive benefits to thl over the coming
years.
The business continues to focus on growth opportunities in Australia as well
as expanding the specialist and emergency vehicle business in New Zealand.
The loan balance to thl reduced as planned, with further reductions on track
for the second half.
The return on funds employed in this business will be well above expectations
in FY16.
FINANCIAL POSITION AND CAPITAL EXPENDITURE
Capital Expenditure
The expected capital expenditure for the year will be on the higher side of
expectations with increased fleet in the USA post the closure of the
competitor Camping World rentals operation.
We expect full year net capex to be between $25M and $30M.
As a result we expect net debt to be between $80M and $85M for 30 June 2015.
Dividend
A dividend of 7 cents per share has been declared. The dividend record date
is 9th April 2015 with a payment date of 16th April 2015.
CORPORATE GOVERNANCE
Grainne Troute has commenced her appointment to the board of thl. With the
retirement of Graeme Bowker this month, Graeme Wong has commenced as Chairman
of the Audit and Risk Committee and Grainne Troute has commenced as Chairman
of the Remuneration and Nomination Committee.
The board and business would like to thank Graeme Bowker for his long and
valuable service to thl, especially as an overseas based director and strong
advocate for the business in the Australian market.
OUTLOOK
The business remains confident of achieving at least $17M Net Profit After
Tax for the full FY15 financial year.
The general outlook to FY16 also remains positive at this point in time.
Internally, controlled growth is expected to enable further profit growth and
general tourism demand remains positive internationally.
We remain more focused on consumer confidence in all source market countries
than exchange rate fluctuations although we acknowledge price pressure
increases and the ability to achieve increased yields diminish when the NZD
is strong.
Achieving appropriate returns for shareholders has been the mantra over the
past two years and remains the key focal point for the business today.
ENDS
Authorised by:
Rob Campbell
Chairman, Tourism Holdings Limited
For further information contact:
Grant Webster
thl Chief Executive
Direct Dial: +64 9 336 4255
Mobile: +64 21 449 210
Mark Davis
thl Chief Financial Officer
Direct Dial: +64 9 336 4212
Mobile: +64 27 444 0199
About thl (www.thlonline.com)
thl is New Zealand's premier tourism company. We are listed on the NZX and
are the largest provider of holiday vehicles for rent and sale in Australia
and New Zealand. In the USA we own and operate the Road Bear RV Rentals and
Sales and Britz USA brands. Within New Zealand we operate Kiwi Experience
and the Discover Waitomo group which includes Waitomo Glowworm Caves, Ruakuri
Cave, Aranui Cave and The Legendary Black Water Rafting Co. In 2012 thl
entered in a joint venture to form RV Manufacturing Group LP, New Zealand's
largest motorhome and specialist vehicle manufacturer. RVMG LP has
operations both in Auckland and Hamilton. Our purpose is to create
unforgettable holidays by providing unique, wonderful experiences that make
vacations truly memorable.
End CA:00261101 For:THL Type:HALFYR Time:2015-02-25 08:54:45
