Mount Cook cuts first half loss

Press, 29 January 1988, Page 20

Mount Cook cuts first half loss

Althougii Mount Cook Group yesterday reported a substantially reduced total loss in its latest halfyear, the directors expect the annual result to fall short of the previous 12rnonth figure. The company yesterday reported a total unaudited loss of $146,000 in the six months to September 30, compared with $1,752,000 in the previous corresponding period. An extraordinary gain of $1,162,000 from insurance recoveries on the building at Coronet Peak, which was destroyed by fire in 1986, helped reduce trading losses. There was an extraordinary loss of $279,000 previously. The director said in a statement that forecasting was more difficult than usual. Present indications were that the full year’s net profit, before extraordinary items, was likely to be down on the previous year’s figure of $1,942,000. Althought the net loss, before extraordinary items at $1,308,000 ($1,473,000 previously), was marginally more favourable than in the last corresponding period the underlying trading performance of the company had improved in spite of increased competition. However, the trading improvement had- been virtually offset by reduced tax incentives of $509,000 (which are being phased

out) and an adverse currency movement of $672,000 when compared with 1986. Results since September were encouraging but competition in tourism had increased because additional investment was now trading by some competitors. This would have some impact on the final results for the second six months as would the persistently high kiwi dollar exchange rate, which was having the effect of making a New Zealand holiday more expensive, the directors said. Uncertainty also prevailed about what would be the real effect of the October share market collapse on inbound tourism. It was likely that the impact would be negative, and the real issue was by how much. Mount Cook had previously referred to uneconomic investment and pricing in certain areas of the tourist industry. The truth of these past comments was shown in the current results which, in covering the traditional off-peak season, indicated the difficulty of producing adequate margins against turnover. Tourism in New Zealand generally enjoyed a high level of activity in only the summer period between October and April. For most operators May through September is

a lean period. Typically, Mount Cook traded at a loss during this period and 1987 was no exception. However, the company had been developing its operations towards a 10month tourism season through the ownership of two ski areas and its transport versatility, they said. The company enjoyed a record 1987 ski season for its Queenstown ski areas mainly because of the length of season at The Remarkables (July 1 to October 29) and this was an important influence on airline and land transport revenue through the otherwise quiet winter period. Motorhomes also benefited from the popularity of the southern snowfields. Gross revenue increased 23.4 per cent to $52,305,000, reflecting the strong marketing now placed on all divisions and the acquisition of H and H Travel Lines, they said. A pre-tax loss of $2,450,000 was recorded compared to $2,621,000 previously.