Mount Cook has strong bookings

Press, 3 October 1985, Page 26

Mount Cook has strong bookings

Forward bookings for the Mount Cook Group, Ltd, are very strong, says the chief executive, Mr N. F. Tolerton, in his review with the company’s annual report The growth trend evident in the tourist industry for the last two years appears to be fully established, Mr Tolerton says. “The year 1984-85 has been a ‘growing pains’ period. With expanded services to cater for the trend plus the large investment in The Remarkables ski area, the group faces a large step-cost which could not be recovered in the short term.

“This situation will apply to a lesser extent in the period ahead. Revenue should continue to rise, and the rate of cost increase become substantially lower.” The immediate future should produce significantly better results, Mr Tolerton says.

He emphasises the development of a simpler organisation structure and a "stronger management team” to build on the group’s past entrepreneurial skills. For the second successive year, the number of visitor arrivals in New Zealand had grown strongly, and the Mount Cook Group had expanded rapidly to cater for them. This incurred expansion costs in a year when ski-ing conditions were the worst on record. This was reflected in the disappointing profit result.

Devaluation of the currency helped the tourist inflow, but had caused higher costs of running offices in Australia, America, and Japan, and made spare parts and fuel more expensive.

The previous financial year had benefited from market growth without adding significantly to capital investment and operating cost. The latest year bore the brunt of both, Mr Tolerton says.

Group capital invested in The Remarkables Ski Area and new plant totalled J15.8M.

This investment will not fully benefit profit until 1986 and beyond, Mr Tolerton says. The effects of expanding overseas sales

offices also have a delayed period of return.

One of the costs Mr Tolerton comments on is airline dues. These have increased 75 per cent. Now 22 per cent of gross air revenue is paid out in airways dues (14 per cent) airport dues (3 per cent), anti domestic passenger tax (5 per cent).

“In the early part of the year it was not possible to recover such costs through fare increases because of the price freeze, while in the latter half the presence of a competitor on routes parallel to ours tended to keep fare levels low.”

Coronet Peak suffered from poor snow, with total skier days less than half those of the previous season. This caused a very poor result. Mr Tolerton says that coach tour

bookings are strong, and the new motor-home division will be doubled in the season ahead. A new 250-passenger catamaran is being built for Bay of Island cruises. As previously reported there was a 24 per cent rise in sales to $81,901,000. This, says Mr Tolert'on, was offset by heavy cost increases because of devaluation, competition and capacity constraints at peak periods. The profit was $3,834,000, compared with the previous years record of $4,648,000. (This year’s profit includes a tax credit of $1,242,000 and extraoardinary income from sale of properties and car operations of $541,000. The previous year the corresponding tax provision was a debit of $839,000 and extraordinary items totalling $721,000.)

The airline accounted for 40.7 per cent of the group’s earnings at $33.340M in the latest year. Tours and travel accounted for 28.1 per cent, the landline for 14.8 per cent, freight 14.4 per cent, and the 1 ski area, 2.0 per cent. The return on shareholders’ - funds is 13.8 per cent, compared with 20.7 per cent the . previous year. Dividend cover is 2.4 (3.8) and the proportion of shareholders’ funds to total assets is 47.8 per cent (48.3).