New Zealand-based RV rental firm Tourism Holdings Ltd. reported that the company doubled first-half profit as it benefited from the January 2017 acquisition of U.S. rental and sales business El Monte coupled with U.S. tax changes.
According to a statement, profit jumped to $22.8 million, or 18 cents per share, in the six months ended Dec. 31, from $11.3 million, or 9 1/2 cents, in the year-earlier period. Earnings were boosted by a one-time gain of $1.8 million due to U.S. tax change regarding the way deferred tax is measured, while a drop in the U.S. federal tax rate to 21% from 35% reduced tax in the period by $2.3 million.
Revenue rose 43% to $73.1 million, including $29 million in rental revenue and $15 million in vehicle sale revenue from the El Monte business.
Tourism Holdings is expanding its campervan business globally and boasts the largest fleet of RVs for rent and sale in Australia and New Zealand, the second-largest RV rental business in the U.S., a half stake in a U.K. motorhome business, interests in motorhome manufacturing and services, and tourism ventures. The new El Monte business exceeded expectations, producing earnings before interest and tax of $7.2 million in the 2017 calendar year, ahead of a targeted $6.6 million. In the U.S., Tourism Holdings also operates Road Bear and Britz rental companies.
“It is pleasing to see most of the core businesses continue to improve, as well as seeing the El Monte RV business outperform our expectations for the calendar year,” said Chairman Rob Campbell.
Tourism Holdings expects full-year profit of between $55 million and $59 million, including one-time items such as the gain from the way deferred tax is now measured in the US, and the expected gain from the creation of its RV services joint venture with U.S. RV manufacturer Thor Industries Inc. Excluding the one-time items, it forecast profit of $36 million to $40 million. That compares with 2017 full-year profit of $30.2 million.
In the company’s interim report to shareholders, Campbell and CEO Grant Webster said the outlook for all operating markets into the 2019 financial year “is currently positive”, although noting that there appears to be “greater price sensitivity” and increases in yield achieved broadly by the industry over the last two year “will likely stabilize”.
“Competitor activity is as we had expected and, pleasingly, any fleet growth in markets seem to be well aligned with increases in demand,” they said.
Tourism Holdings increased its debt to buy El Monte but said it was paying that back faster than originally planned. Net debt for the business increased to $178 million at Dec. 31, from $103 million in the previous corresponding period, but below the forecast of $200 million.
“The outlook remains positive and we will continue to grow in a sensible but global manner,” Webster said.
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