Tourism Holdings Limited (thl) posted a $39.9 million statutory net profit after tax for FY26, reversing a prior year loss, while navigating geopolitical headwinds and receiving competing takeover bids.
- 34% underlying NPAT growth to $46.1 million
- Rental revenue up 11% driven by fleet expansion
- UK & Ireland business divested for ~$57 million
- Two non-binding takeover offers at $3.10 and $3.30-$3.40 per share
- 62% dividend increase to 10.5 cents per share
Profit Turnaround and Dividend Boost
Tourism Holdings Limited (NZX:THL, ASX:THL) has delivered a sharp turnaround in FY26, posting a statutory net profit after tax (NPAT) of NZD 39.9 million from continuing operations, compared to a loss of NZD 14.1 million in FY25. Underlying NPAT grew 34% to NZD 46.1 million, driven primarily by an 11% rise in rental revenue to NZD 517.5 million, underpinned by a 10% expansion in the rental fleet to 8,587 vehicles and improved revenue per average rental vehicle (RevPARV).
The Board declared a full-year dividend of 10.5 cents per share, a 62% lift on the prior year, with a final dividend of 7.5 cents fully imputed and 10% franked. This payout represents approximately 50% of underlying NPAT, sitting at the midpoint of thl’s dividend policy range.
Strategic Reshaping and Operational Discipline
FY26 was marked by decisive strategic moves, including the divestment of thl’s UK & Ireland Rentals & Sales business for approximately NZD 57 million, releasing capital from underperforming markets. The company also exited two loss-making Australian dealerships and closed its Brisbane manufacturing facility, consolidating production into its New Zealand plant. These initiatives, alongside fleet and procurement synergies implemented in North America, contributed to approximately NZD 5 million in underlying cost savings.
Despite these gains, thl’s Return on Funds Employed (ROFE) improved modestly to 8.7% from 7.6% in FY25, still well below the 15% target. The underperformance of the USA and Australian retail businesses remains a drag on overall returns.
Takeover Interest Intensifies
The Board is currently considering two non-binding indicative takeover proposals, reflecting significant premium bids over the initial $2.30 per share offer received in June 2025. The BGH consortium has revised its offer to $3.10 per share, while a competing credible strategic acquirer has tabled a range between $3.30 and $3.40 per share. Both parties have been granted due diligence access, with management sessions and site visits underway. The due diligence phase is expected to continue for approximately six more weeks. The Board emphasises that these proposals remain subject to conditions and no certainty exists that a transaction will eventuate.
Geopolitical Headwinds Impact FY27 Prospects
Strong momentum in rental bookings and strategic initiatives in the first half of FY26 was disrupted by the Middle East conflict, which caused a spike in fuel prices and travel uncertainty. This disruption created a gap in forward booking intake unlikely to be fully recovered in FY27, tempering growth expectations. While southern hemisphere bookings have since rebounded, New Zealand’s intake over the past four weeks is up around 40%, and Canada is on track for a record summer season, the USA market remains soft with recent bookings about 45% ahead of prior year but still subdued overall.
RV sales markets globally remain weak, with retail sales volumes down 27% in Australia and 23% in New Zealand, and ex-fleet sales volumes down 25% overall. Margins have improved in some regions, notably in Australia’s retail sales, where gross profit margins rose from 6.4% in H1 to 8.3% in H2 following dealership rationalisations. Thl’s rental-led, vertically integrated business model provides flexibility to navigate these cyclical sales challenges by adjusting fleet purchases and rotation.
Sustainability and Climate Commitments
Though no longer a mandatory climate-reporting entity under New Zealand law, thl voluntarily continues to disclose climate-related risks and sustainability progress, aligned with the Aotearoa New Zealand Climate Standards. The company’s Future-Fit sustainability program focuses on operational emissions reduction, sustainable procurement, and transitioning to a low-carbon fleet, despite limited availability of suitable zero or low-emissions RV chassis and charging infrastructure globally.
Thl’s total greenhouse gas emissions decreased 7% from FY25 and 34% from its FY24 baseline, primarily due to lower vehicle sales volumes and operational efficiencies. The company targets a 50.4% reduction in Scope 1 and 2 emissions by FY32, though Scope 3 emissions, mainly from customer vehicle use, remain the largest challenge.
Financial Strength and Capital Management
Thl’s balance sheet strengthened with net debt down to NZD 436 million (or NZD 453 million on a four-week normalised basis), improving leverage to 2.32x (pre-IFRS 16) and an equity ratio of 41%. Net operating cash flows from continuing operations increased 67% to NZD 67.3 million, supported by improved profitability and working capital management, including inventory reductions from dealership and factory closures.
Capital expenditure on fleet totaled NZD 226 million, down from NZD 287 million in FY25, reflecting a right-sizing of the North American fleet. Non-fleet capital expenditure fell to NZD 13 million, providing a more sustainable baseline for future investments.
Executive Remuneration and Governance Updates
The Remuneration Committee oversaw a review of CEO Grant Webster’s pay, resulting in a 26.6% base salary increase effective May 2026 and increased short- and long-term incentive opportunities for FY27. The CEO’s total FY26 remuneration included a fixed salary of approximately NZD 1.1 million and a partial short-term incentive payout of 71% of maximum, reflecting strong but disrupted performance.
Board composition saw the retirement of Gráinne Troute and the appointment of Barbara Chapman, bringing extensive governance and executive experience. The Board remains predominantly independent, with Grant Webster as the sole executive director.
What to Watch Next
Thl’s near-term outlook hinges on the resolution of its takeover processes and the recovery of forward bookings disrupted by geopolitical tensions. The company’s ability to execute its strategic initiatives, particularly in the USA and Australian markets, will be critical to bridging the gap to its long-term underlying NPAT target of NZD 100 million. Meanwhile, progress in transitioning to a low-emissions fleet remains constrained by external technology and infrastructure factors, posing ongoing sustainability challenges.
Bottom Line?
Thl’s FY26 rebound and strategic resets set a foundation, but takeover outcomes and geopolitical disruptions cloud the path to its $100 million profit goal.
Questions in the middle?
- Will the competing takeover bids at $3.10 and $3.30-$3.40 per share lead to a binding transaction?
- How quickly can thl recover deferred rental bookings and translate that into FY27 earnings growth?
- What impact will limited low-emissions RV technology availability have on thl’s sustainability targets and capital allocation?