Airlines, travel agents, rental cars ride booming NZ tourism
By Rebecca Howard
Feb. 22 (BusinessDesk) - Companies exposed to New Zealand's booming tourism sector are reaping the benefits with Tourism Holdings doubling its first-half profit, Air New Zealand lifting its dividend, Qantas Airways' Jetstar unit reporting higher passenger numbers and Flight Centre Travel Group lifting Kiwi transaction volumes.
New Zealand has seen a surge in tourism numbers in recent years. Short-term visitor arrivals, which include tourists, people visiting family and friends and people travelling for work, reached 3.7 million in calendar 2017, up 6.7 percent from a year earlier. Spending by international visitors in New Zealand was $10.6 billion in 2017, according to data from the Ministry of Business, Innovation and Employment.
That visitor inflow has been seen as a boost to the local economy, but also underpinned stronger earnings for a group of companies exposed to the sector and which reported today. The market response was mostly positive, with Air New Zealand shares rising 3.5 percent to $3.07, while ASX-listed Qantas gained 6.8 percent to A$5.63 and Flight Centre jumped 11 percent to A$55.68. NZX-listed Tourism Holdings was the only stock to decline, falling 1.7 percent to $5.94.
Rental van operator Tourism Holdings doubled first-half profit of tax breaks in the US and an expansion into North America, however, its New Zealand rental business, renting Maui, Britz and Mighty motorhomes and selling RV Super Centre Motorhomes, also fared well. Earnings before interest and tax lifted to $4.7 million from $2.6 million, as revenue advanced to $56.8 million from $49.4 million. The New Zealand tourism business, which operates the Kiwi Experience the Discover Waitomo Group, increased ebit to $3.3 million from $3 million as revenue edged up to $18.3 million from $17.7 million.
National carrier Air New Zealand posted a 7.4 percent fall in first-half pretax profit to $323 million but declared a fully imputed interim dividend of 11 cents per share, a 10 percent increase from the prior period and the highest ordinary interim dividend in the airline’s history. The result was weighed by an 18 percent lift in fuel prices but operating revenue rose 5.6 percent to $2.7 billion, with robust demand across all markets and particularly strong growth in the short-haul network. Passenger revenue reached an all-time record for an interim result, at $2.3 billion, Air New Zealand said.
Across the Tasman, Qantas said first-half underlying profit before tax was A$976 million for the six months to Dec. 31 as Qantas and Jetstar’s international operations performed well in the face of higher fuel costs and increased competitor capacity. Its Jetstar International unit, which includes New Zealand domestic and regional and Australia outbound, boosted passenger numbers to 3.25 billion from 3.14 billion, while its revenue per kilometres rose 6 percent and its available seat kilometres rose 3 percent.
Australian travel agency Flight Centre Travel Group said net profit was A$102.2 million in the six months to Dec. 2017 versus A$74.4 million in the prior year and total transaction volume was A$10.2 billion versus A$9.43 billion in the prior year. TTV represents the price at which travel products and services have been sold across the group's various operations, as agents for various airlines and other service providers, plus revenue from other sources.
Flight Centre's New Zealand acquisitions helped contribute to a positive result on this side of the Tasman, it said. In August, the company bought 100 percent of Travel Managers Group, a large broker-based retail travel group and Executive Travel Limited, an independent travel management company. At the time, it said the two businesses will add $3 million of annual earnings before interest, tax, depreciation and amortisation, and Flight Centre said their addition will boost the New Zealand business to almost $1.5 billion in annual sales in the 2018 financial year.
In New Zealand, Flight Centre's total transaction volume rose 11 percent to A$600 million and ebit was A$1.9 million.
"In Australia and New Zealand the company is well placed to grow in the corporate sector, given its positive momentum from 1H," it said.