Mt Cook profit bucks tradition

Press, 13 December 1989, Page 41

Mt Cook profit bucks tradition

Mount cook Group returned a total profit of $227,000 in the six months ended September 30, a period when the company traditionally reports a loss because of a lull in tourism. The Christchurch-based airline and tourism group reported a loss of $1,497 million in the previous corresponding period. “The company’s result was against industry trends with good increases in market share in most activities,” the chairman, Mr Norman Geary, said yesterday. ' However, the low activity in the New Zealand economy, abnormally high competition in many areas, and the industrial difficulties, particularly the Australian pilots’ dispute, all presented many uncertainties for the Company. “Forecasting is most difficult in these circumstances.” At the annual meeting

in August shareholders were warned that intense airline competition could see some short-term profits penalised to protect the group’s long-term interests, he said. Although the profitability during the current financial year had not been affected to the extent predicted at the meeting, there were undoubtedly turbulent times ahead. “Profitability is unlikely to continue to improve at the same rate shown over the last 12 months,” Mr Geary said. For the 12 months ended September, 1989, inbound tourism to New Zealand was about 3% down on the previous year. Holiday arrivals from the United States dropped 19.5%, and holiday visitors from the two other traditional markets of Australia and Japan showed minimal increases of 0.9% and 3.6% respectively. The tourism sector had also suffered from the Australian airline pilots’

strike, with many potential visitors being turned off South Pacific destinations by industrial disruptions.

The unaudited result was a reflection of the company’s marketing and productivity drives. An example was the ski division, which produced a record result in ski holiday products in spite of unusually poor snow conditions in the Southern Lakes region. Package sales in the Australian market were up more than 200% on the previous season. Although snow conditions were far from ideal, staff worked hard with snow making and snow grooming, and provided a high standard of service which ensured skiers had an enjoyable holiday. However, the ski division’s result was down because of the poor snow, he said. The airline ran at a high level during the winter period, and the Landline division capitalised

on the buoyant ski traffic to produce a significant increase in business on its services for skiers. Inbound tour activities recorded an increase in revenue of more than 30%. “The second half year’s results are, however, being quite adversely affected by the pilots’ strike in Australia.” The Company was making progress with its evaluation of the alternative aircraft options open to it to expand and reequip its fleet, Mr Geary said. Gross revenue rose 17.5% to $64.8M. The preliminary statement shows Mount Cook’s shareholders’ funds rose $3.6M to $46.7M, including paid-up capital up $57,000 to $12.7M. Net current assets dropped SI.3M to $4.9M and the current ratio eased from 1.3 to one to 1.2:1. Term liabilities fell 53.2% to S7.IM. The net asset backing a 100 c share improved from 342 c to 369 c.