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CORRECT: Tourism Holdings 2014 profit jumps on fatter margin

CORRECT: Tourism Holdings 2014 profit jumps on fatter margins, forecasts 35% jump in 2015

(deletes reference in penultimate paragraph to 2015 dividend)

By Suze Metherell

Aug. 26 (BusinessDesk) - Tourism Holdings, New Zealand and Australia's largest holiday vehicle rental business, said annual profit soared 192 percent, beating its July guidance, as profitability improves across its New Zealand, Australian and US units. Its shares jumped 8.7 percent.

Profit was $11.1 million in the 12 months ended June 30, up from $3.1 million a year earlier, beating its February guidance of $10.5 million, the Auckland-based company said in a statement. Sales edged up to $225.6 million, from $224.6 million a year earlier, while the cost of sales fell 4.9 percent to $58 million.

Tourism Holdings improved earnings across its business as it sold off excess fleet capacity and lifted its profit margins.The company said it expects profit in the coming year to increase 35 percent to $15 million, led by growth in its New Zealand and Australia rentals businesses and cost cutting.

"The turnaround in profitability has been driven by both revenue growth in most business units, and cost reductions," chief executive Grant Webster said. "We have confidence in the FY15 forecast given the USA high season is well underway, our current cost run rates are in line with cost reductions and forward bookings for the New Zealand and Australia upcoming summer seasons are meeting expectations."

In New Zealand, the rentals business increased earnings before interest and tax by 35 percent to $7.4 million as revenue rose 14 percent to $60.4 million, raising the Ebit margin to 8.6 percent from 7.5 percent. Meanwhile, Ebit from the New Zealand tourism business, which includes Waitomo Group and Kiwi Experience, rose 66 percent to $6.6 million as the companies hit new daily records. Revenue increased 21 percent to $25.1 million, taking the Ebit margin to 26.2 percent from 19.1 percent.

In Australia, earnings in the company's rentals business almost tripled to $3.7 million even as revenue slipped 15 percent to $56.9 million. The Australian Ebit margin rose to 5.3 percent from 1.5 percent.

In the US, earnings rose 17 percent to $7.6 million as sales increased 4 percent to $18 million, increasing the Ebit margin to 17.1 percent from 15.1 percent. Vehicle sales, which were ahead of expectations in 2014, are expected to stabilise at about 450 this year, which combined with a smaller peak season rental fleet will mean lower profits for 2015, the company said.

Tourism Holdings is downsizing its fleet, after buying its New Zealand rivals United Campervans and KEA Campers in 2011 to reduce total campervan numbers and improve margins.The company received $65 million from vehicle sales in 2014, at the top end of its $55 million to $65 million forecast. It expects to continue to reduce its Australian and New Zealand fleets in the coming year, generating an expected $50 million to $60 million of sales, while its US fleet is likely to expand.

Tourism Holdings reduced net debt to $79 million, from $120 million a year earlier, below its July forecast of $90 million.

Capital expenditure of $74 million in 2014 was at the lower end of its $75 million to $85 million range, the company said. It expects to spend $75 million to $85 million in 2015, it said.

The company will pay a 6 cent final dividend, bring the annual dividend to 11 cents, up from the 4 cents the previous year.

Shares of the company climbed 11 cents to $1.38, and have gained 35 percent this year, outperforming the NZX Small Cap index's decline of 3.5 percent.


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