Millennium & Copthorne Hotels New Zealand (MCK) H1 2024 earnings summary

Executive summary

• Revenue for the six months to 30 June 2024 rose 42% year-over-year to $85.32m, driven by a strong hotel recovery and improved property sales.

• Profit before tax increased 88% to $21.53m compared to the same period last year, reflecting operational improvements and the first uninterrupted trading period since the pandemic.

• A one-off non-cash deferred tax adjustment of $25.76m due to legislative changes resulted in a reported after-tax loss of $11.75m.

• Excluding the tax adjustment, adjusted profit after tax was $12.57m, with adjusted EPS of 7.94 cents.

• Hotels business saw improved occupancy and profitability, with average occupancy rising to 69.0% from 59.8% year-over-year.

Financial highlights

• Group revenue: $85.32m (up 42% year-over-year); hotel revenue: $55.9m (up 18%); property sales: $27.5m (up 159%).

• Operating profit: $19.8m (up 127%); profit before tax: $21.53m (up 88%).

• Net loss after tax: $11.75m (vs. $8.4m profit prior year), due to the one-off tax adjustment.

• Adjusted profit after tax: $12.57m (vs. $6.18m prior year).

• Basic EPS: -7.42c (vs. 3.90c prior year); adjusted EPS: 7.94c.

• Net tangible assets per share: $3.36 (down from $3.46 at Dec 2023).

Outlook and guidance

• Confident in continued progress under the Revive and Thrive strategy, with strong staffing and increased room capacity.

• Hotels business expects strong results in the 2024/25 high season, with continued improvement in CDI.

• Economic headwinds, cost inflation, and lack of major events may dampen demand in some regions, but Queenstown remains strong.

• Anticipate resurgence in overseas visitor activity in Q4 2024.

• CDI sales performance improving, with diversification into industrial-zoned land.