Why Is THL Lowering Its FY25 Profit Forecast Amid US Market Worries?
Tourism Holdings Limited trims its FY25 profit guidance to the lower end of analyst expectations, citing ongoing challenges in global RV sales and a potential goodwill impairment tied to its US operations.
- FY25 underlying net profit after tax expected at lower analyst range ($27M–$34.4M)
- Potential NZ$36 million goodwill impairment related to US business under review
- Manufacturing volumes in Australia and New Zealand declining due to right-sizing
- Strong forward rental revenue growth in New Zealand and Australia for FY26
- US rental bookings recovering but still below prior year levels post-Liberation Day
Profit Guidance Revision Reflects Market Headwinds
Tourism Holdings Limited (thl), the world’s largest commercial recreational vehicle (RV) rental operator, has updated its FY25 underlying net profit after tax (uNPAT) guidance to the lower end of the analyst range, now expected between NZ$27.0 million and NZ$34.4 million. This adjustment signals ongoing pressure from global RV sales challenges and softer manufacturing volumes in Australia and New Zealand, where the company has taken steps to right-size production and reduce inventory.
US Market Uncertainty and Goodwill Impairment Risk
One of the more significant concerns for thl is the uncertain outlook for international travel to the United States, which has prompted the company to conduct impairment testing on NZ$36 million of goodwill associated with its US business. While no final decision has been made, the potential impairment highlights the risks tied to the US market’s recovery trajectory. The company also flagged other potential one-off non-cash items that may affect statutory net profit, though these do not impact covenant assessments.
Encouraging Forward Rental Revenue Trends
Despite near-term earnings pressure, thl enters FY26 with a positive outlook on rental revenue growth. Forward bookings in New Zealand and Australia are approximately 25% higher than the same time last year, indicating strong demand momentum. In contrast, the US market experienced a sharp initial decline in bookings following the country’s Liberation Day, with a 40–50% drop, but recent intake has improved, narrowing the gap to a single-digit percentage decline beyond the current high season.
Financial Position and Strategic Initiatives
Starting FY26 with net debt around NZ$500 million (excluding lease liabilities), thl is navigating a challenging cycle but remains focused on long-term value creation. The company has been working on a range of initiatives aimed at addressing market challenges and expects to provide further details on these efforts in due course. Investors will be watching closely for how these strategies translate into improved performance and shareholder returns.
Bottom Line?
THL’s cautious profit outlook and potential US goodwill impairment underscore the delicate balance between near-term challenges and long-term growth prospects.
Questions in the middle?
- What will be the final outcome of the US goodwill impairment testing?
- How will thl’s strategic initiatives impact profitability and market share in FY26?
- Can the US rental market fully recover to pre-Liberation Day booking levels?
