Tourism Holdings Rentals (THL) H2 2025 earnings summary

Executive summary

• Results remain below expectations, with a statutory net loss after tax of -$25.8M due to $54.5M in one-off adjustments, mainly non-cash impairments in the USA and UK, and underlying NPAT down 45% to $28.7M, reflecting bottom-of-cycle earnings and industry-wide challenges.

• Balance sheet is strong, with year-end net debt at $492M and expectations that debt has peaked.

• Strategic focus is on rentals as the core growth driver, with vehicle sales supporting the business model and initiatives underway to address underperforming divisions.

• Dividend maintained within a 40%-60% payout ratio, with a full-year payout of 6.5c per share, signaling confidence in future performance and lower CapEx needs.

• Sale of services revenue grew 10% to $486.5M, with the rental fleet increasing 8% to 8,564 vehicles.

Financial highlights

• Underlying EBITDA was $199.2M, only marginally down year-over-year, and underlying EBIT fell 22% to $86.8M.

• Net debt closed at $492M, with leverage expected to decline.

• Operating cash flow improved by $124.2M to $28.6M due to lower fleet CapEx and better inventory management.

• Rental revenue now represents just over 50% of the business, expected to grow further.

• Sale of goods revenue declined 6% to $451M.

Outlook and guidance

• No formal FY 2026 guidance provided, but significant cost reduction and efficiency initiatives are planned, focusing on fleet build, procurement, and overheads.

• Double-digit rental growth anticipated, with forward bookings in Australasia up 25% year-over-year, though this rate is not expected to hold for the full year.

• Modest volume growth and stable margins expected in sales, with material uplift likely from 2026 onwards, contingent on consumer confidence recovery.

• Net profit after tax target of $100M within three to four years remains unchanged, driven by rental day growth, North American synergies, and cost optimisation.

• Lower gross and net fleet capital expenditure expected, with growth focused on ANZ.