Millennium & Copthorne Hotels New Zealand (MCK) H1 2025 earnings summary

Executive summary

• Strategic execution and the Revive and Thrive strategy have demonstrated business resilience amid economic headwinds, with a focus on long-term property improvement and positioning for tourism sector recovery.

• Returned to profitability with net profit of $8.5m for the six months ended 30 June 2025, compared to a $10.2m loss in the same period last year.

• Hotel segment delivered strong growth, offset by weaker property sales from the development subsidiary, leading to lower overall profit.

• International travel demand and refurbished room availability drove a 15% year-over-year increase in hotel revenue, despite softer domestic and corporate travel.

• Recent hotel acquisitions, including Mayfair Hotel Christchurch and Sofitel Brisbane Central, exceeded performance expectations and contributed positively to results.

Financial highlights

• Total revenue for HY25 was $79.3m, down 7.1% from $85.3m in HY24, mainly due to a 51% drop in property sales revenue; NZ hotel revenue rose to $64.1m.

• Profit before tax fell 47.3% year-over-year to $11.3m; operating profit decreased 39.6% to $12.0m.

• Earnings per share were 4.20c, compared to (7.42c) in HY24; excluding a one-off deferred tax adjustment, EPS was 7.94c.

• Book value increased to $787.3m from $762.3m at FY24.

• Gross profit fell to $42.7m from $46.8m year-over-year, and gross margin was 53.8%, down from 54.9%.

Outlook and guidance

• Economic recovery is expected to drive demand, though timing and pace remain uncertain; regional demand varies.

• Challenging trading conditions expected to persist into Q3 2025, with some growth anticipated in Q4 from both domestic and international business.

• Property development segment expects a pick-up in residential property markets in 2026, driven by lower interest rates and regional economic growth.

• Priorities include increasing room capacity, ongoing refurbishments, and optimising residential section sales.

• Focus remains on targeted marketing, inventory management, and driving occupancy and revenue.