Hotel firm fears NZ dollar blow
A report in NZ’s The Dominion Post says that hotel operator Millennium & Copthorne is warning that it will begin to feel the impact of the high New Zealand dollar in the second half of the year.
The company reported yesterday that after-tax profits were $12.95 million for the six months to June, an increase of 14.1 per cent compared with the same period a year ago. The company does not pay interim dividends.
Chairman Wong Hong Ren said the result was satisfactory considering static international visitor numbers and higher wage and energy costs, adding, “The effect of the high New Zealand dollar is yet to be felt, but is likely to have an impact in the latter part of 2007 as the company renegotiates its agreements with key international suppliers”.
The company runs 31 hotels in New Zealand under the Millennium, Copthorne and Kingsgate brands, it also has some operations in Australia, and owns 64.3 per cent of listed property company CDL Investments, which reported on Monday that interim after-tax earnings had nearly doubled to $7.57 million.
Mr Wong said the better-than-expected profit from CDL Investments was the most significant contributor to Millennium & Copthorne New Zealand’s latest result.
Of Millennium & Copthorne’s $25.5 million pre-tax profit, CDL contributed 44.2 per cent, the New Zealand hotel operations 38.3 per cent, and the Australian operations 17.5 per cent.
At the same time a year ago, the New Zealand hotels contributed 47 per cent of pre-tax earnings, with just 26.5 per cent from CDL.
The group’s revenue in the latest period was $95 million, down from $102.47 million a year ago.
Revenues from the New Zealand hotels were down by about $1 million from a year ago, to $63.54 million, while occupancy rates were static at 70.2 per cent.
Mr Wong said the company was continuing with a refurbishment and reinvestment programme for the New Zealand hotels and was seeing tangible results from this.
“Assuming no adverse or unforeseen events, the board believes that the results for the full year will continue to be profitable,” Mr Wong said.
The company’s shares were unchanged at 82 cents yesterday.
Report by The Mole
John Alwyn-Jones
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