Tourism Holdings stock tumbles as NZ firms eye storm damage

Tourism Holdings stock tumbles as NZ firms assess damage from Australia's storms

By Jason Krupp

Feb. 4 (BusinessDesk) - Shares in Tourism Holdings Ltd. shed almost a quarter of their value after the campervan rental company said flooding and storms in Queensland had dented forward bookings during its peak earnings season.

The shares plunged 23% today to 57 cents as New Zealand firms with exposure to Queensland counted the cost of the floods and Cyclone Yasi, the most powerful storm to hit Australia in a century. Michael Hill International, now based in Brisbane, said today that Australia’s natural disasters could erode full-year earnings by almost 10%.

Tourism Holdings cut its annual guidance and now expects a net loss of $4 million for the 12-months ending June 30 from an earlier estimated profit of $2.5 million. The Australian weather disasters have broadsided the tourism operator while it is at its most vulnerable. The weak U.S. and U.K. economies are sapping volumes of long-haul visitors who have also been deterred by the strong Australian and New Zealand currencies.

"THL, with their peak in January and February, it's not easy for them to adjust their costs for shifts in revenue, which were already under pressure," said Rob Mercer, head of research for Forsyth Barr. "Anyone with disproportionate exposure (to the Queensland disasters) can't recover that."

Mercer said overall, “when you do isolate by region, you don't expect to see a lot of (New Zealand) companies impacted."

Besides Tourism Holdings, New Zealand-listed companies have largely sidestepped the worst effects of the Australia meteorological catastrophes.

Mercer said Air New Zealand Ltd. may see a small dip in overall passenger volumes with almost 50% of the New Zealand's visitors originating in Australia, with Queensland a popular point of origin, but overall it would not be "a big issue when put in proportion to all their other exposures".

Its shares were unchanged at $1.39 today.

Likewise Auckland International Airport Ltd., which owns a 25% stake in Cairns and Mackay airports, is seen as largely unaffected with only minimal operational disruptions reported. Its stock fell 0.5% to $2.22.

Fletcher Building Ltd. could be a potential beneficiary of the disaster, said Mercer, particularly among its particle board and insulation businesses where the construction company is a dominant player in the market. Fletcher rose 1% to $7.99, the highest since late November.

Nuplex Industries Ltd., the industrial chemicals and resign marker, is also expected to indirectly benefit from repair operations. It was unchanged at $3.60.

Mercer said while New Zealand retailers with stores in Queensland will feel the impact operationally, the overall slide in Australian consumer confidence was a far more pressing issue.

(BusinessDesk)

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