How thl’s UK Sale and Fleet Growth Fuel a 65% NPAT Surge in FY26
thl reports an 11% rise in underlying NPAT for H1 FY26 and sets a bullish FY26 guidance, underpinned by strategic divestments and cost efficiencies.
- 11% increase in underlying NPAT to $29.5M in H1 FY26
- FY26 underlying NPAT guidance raised to $43M–$47M, implying 50–65% growth
- Conditional sale of UK & Ireland business for circa $58.3M underway
- Net debt expected to fall below $400M by year-end, saving $6M in FY27 interest costs
- Rental fleet grows 10%, rental revenue up 11%, vehicle sales stabilising
Strong First Half Performance Amid Transition
thl has delivered a solid first half in FY26, with an 11% increase in underlying net profit after tax (NPAT) to $29.5 million. This performance reflects the company’s successful navigation through a transitional phase marked by a global tourism rebound and stabilising vehicle sales markets. While the U.S. market remains challenging, thl’s diversified operations across New Zealand, Australia, Canada, and the UK have helped underpin growth.
Strategic Divestment and Cost Discipline
A key highlight is the conditional agreement to sell the UK & Ireland business for approximately $58.3 million, a move that aligns with thl’s strategy to focus on higher-return markets. This divestment is expected to generate a one-off gain of up to $6.8 million and contribute to a targeted net debt reduction below $400 million by the end of FY26. The company has also executed over $3 million in corporate cost reductions in H1, alongside rationalising underperforming dealerships and consolidating manufacturing operations, notably closing the Brisbane factory and centralising production in Hamilton, New Zealand.
Fleet Expansion and Rental Revenue Growth
thl’s rental fleet expanded by 10% to 8,688 vehicles, with growth concentrated in New Zealand and Australia where returns on funds employed (ROFE) are higher. Rental revenue increased by 11%, driven by strong demand and improved rental yields outside the U.S. The company expects this momentum to continue into H2 FY26, particularly in key markets like New Zealand, where a larger fleet is expected to translate into record earnings despite short-term depreciation impacts.
Vehicle Sales Stabilising but Challenging
Vehicle sales remain a mixed picture. While ex-fleet sales margins have normalised following COVID-era adjustments, retail sales volumes and margins have declined, partly due to dealership closures and ongoing market headwinds. thl anticipates retail sales margins to stabilise and recover over the medium term, supported by new, lower-cost motorhome products from its New Zealand manufacturing base.
Outlook and Growth Roadmap
Looking ahead, thl expects FY26 underlying NPAT to reach between $43 million and $47 million, representing a 50% to 65% increase year-on-year. This guidance factors in a $1 million reduction related to the timing of the UK divestment. The company remains on track towards its medium-term $100 million NPAT target, with FY27 poised for further earnings growth supported by positive rental demand and ongoing strategic initiatives. Net debt reduction and disciplined capital management are expected to continue, delivering interest cost savings and improved financial flexibility.
Bottom Line?
thl’s decisive strategic moves and rental market strength set the stage for robust earnings growth, but execution risks remain as the UK sale finalises and U.S. market challenges persist.
Questions in the middle?
- When will the UK & Ireland divestment complete and how will proceeds be deployed?
- How quickly can thl realise full fleet synergy benefits, especially in North America?
- What is the outlook for U.S. rental demand and vehicle sales recovery beyond FY26?
