South African tourism and travel services group Tourvest (TRT) on Monday reported a 62% rise in headline earnings per share to 9,4 cents for the six months ended December 25 from 5,8 cents for the same period the year before.
In the period, the company grew revenue by 48.1% to R895-million and operating income increased by 63,9% to R107-million.
The group’s operating margin improved from 10,8% to 12,0% due to stronger performances from Travel and Financial Services. Attributable income was up 62,4% to R70-million from a previous R43m.
A dividend of 8 cents per share was paid on 7 October 2002 in line with the policy of paying an annual dividend post year-end. The company said the base of the prior year period was weak due to the September 11 events, which severely impacted world tourism.
Tourvest’s Travel and Financial Services division saw revenue rise 40% to R539-million, while income before tax grew 102,6% to R61m.
The inbound operations performed well and continued to enjoy good passenger growth. However, the strengthening of the rand had a negative impact on margins
towards the end of the period.
The World Summit on Sustainable Development provided a great marketing platform for the country. In November, South Africa entered into a Memorandum
of Understanding with the Republic of China, granting Approved Destination Status (ADS) to South Africa. This will result in a significant increase in tourists from Mainland China, Tourvest said.
The Cricket World Cup will give South Africa further exposure internationally as a destination and prospects going forward are encouraging.
The outbound operations achieved a significant turnaround from the prior period. The consolidation of Seekers Travel and American Express Travel has paid off and market share has increased, Tourvest added.
The Tour Operators are well down the road to sustained profitability. Costs have been reduced substantially and both ATO and Absolute Tours are clearly focused on their respective niches. The strengthening of the rand is also assisting with their performance.
Tourvest’s cruise business, Starlight Cruises, which has changed from agent to charterer, has had a better than expected season. This has been due to a successful marketing campaign, which has increased passenger numbers by 40% over the prior year.
American Express Foreign Exchange achieved acceptable results. However, a burglary at one of the hub branches resulting in an insurance excess cost of R6m, together with the impact of a strengthened rand, dented what would otherwise have been a strong performance.
The Retail Merchandise division saw revenue rise R62,2% to R356m and income before taxation grow 50% to R60m.
However, margins decreased from 18,0% to 16,7%. The National Parks concession, awarded some 18 months ago, delivered a strong trading performance, but at lower margins. Branded in a retail context as The Parks Shop, these 15 stores have a significant grocery component, which results in lower overall margins being achieved relative to our traditional curio business model.
In addition, the Inflight Duty Free operation has been affected by the strength of the rand. This company is dollar-based and competes in a global market. Due to the nature of the business, the strengthening of the local currency has resulted in margin erosion whilst its trading performance has remained strong.
The roll-out and refurbishment of the Forma Viva jewellery chain has continued and there are now ten stores in the chain. The overall performance of Tourvest’s jewellery interests were “solid” rather than “exciting”, compared to the flurry of trading activity which took place in the last quarter of the prior period.
“An exception is the performance of Centenary Jewellers. This company introduced a new generation tourist retail concept in The Diamond Works. They have traded well ahead of budget and this performance is set to continue,” Tourvest added.
Tourvest said that while the first half of the year traded well, this quantum of improvement will not be experienced in the second half. The bulk of Tourvest’s income is derived from foreign tourists, thus the impact of a firmer rand will depress earnings growth.
“Our performance in the second half of the prior year was excellent. Due to this high base, we will not record anything near the percentage growth achieved in the first half of the current year. For the year overall however, growth is still expected to be good,” Tourvest concluded. – I-Net Bridge