First-half profit for THL points to 175% lift

Tourism operator Tourism Holdings Ltd (THL) has booked a turnaround profit for its first-half trading, prompting a strong forecast for a 175% increase on full-year profit.

THL's revenue for the half year to December rose 4% to $112 million, with earnings before interest and tax (ebit) up $1.9 million to $7.2 million, while its after-tax profit was $2.5 million, a marked improvement on a $500,000 loss a year ago.

THL chairman Rob Campbell said the improved half-year result set ''a strong base for a dramatically improved full-year 2014 result''.

''We're now in a position to forecast a full-year 2014 net profit after tax of $10.5 million, which will be an increase of 175% on the prior year [$3.8 million],''Mr Campbell said.

The interim dividend rose from 2c a year ago to 5c. THL shares rose more than 9.5% to $1.15, following the announcement.

Craigs Investment Partners broker Peter McIntyre said THL's directors were ''bullish'' and showing ''confidence'' in providing forecasts, which had not been seen for some time.

THL said there were positive results from the New Zealand rentals business merger, with rental revenue up 18% and vehicle sales up 60%, with improved tourism group results being the primary drivers of the improved result.

The Australian business, as previously forecast, traded down on the previous year - rental revenue down 18% and vehicle sales down 24% - but was making ''outstanding progress'' on reducing costs and refocusing the business, with a target to achieve a 14% return on funds.

The US had strong fleet sales, of 262 vehicles, throughout the 2013 calendar year, but that limited rental revenue growth in the US high season to 2%. The joint venture manufacturing business showed a significant turnaround in profitability, from a $700,000 loss a year ago to a $700,000 profit.

The company's net debt decreased by $37 million to $97 million.

THL's chief executive, Grant Webster, singled out debt repayment, saying while a portion of the decrease against guidance was timing, he could now ''confidently forecast'' a net debt figure for June 2014 of $95 million, a 40% drop since the New Zealand rentals merger in November 2012.

- simon.hartley@odt.co.nz

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