Tourism Holdings (ASX:THL) cuts FY26 profit and debt guidance, but gets another takeover bid

Vehicle sales softened, and the balance sheet just got A$70m heavier than promised

Tourism Holdings (ASX:THL) has trimmed its FY26 earnings guidance and, more notably, told the market its year-end net debt will land between A$460 million and A$470 million. That is well above the sub-A$400 million figure flagged just three months ago at the interim result.

On the earnings line, the company now expects underlying NPAT of A$40 million to A$43 million on a continuing operations basis, down from the previous A$43 million to A$47 million range. Management is framing this as a resilient outcome given the global tourism backdrop, and on the profit line, that argument has some merit.

The debt revision is the more interesting number. It reflects softer vehicle sales since March, around A$10 million of adverse FX, and roughly A$20 million in working capital drag including a slower-than-planned inventory wind-down from the closed Australian manufacturing operation.

Any other company with such a track record that announced this would fall >30%. But instead, shares went the other way and the reason is because the BGH Capital and Trouchet family consortium, which circled the company at NZ$2.30 a share last year, came back with a new offer. The takeover did not land, and now the standalone story had to carry the load through a Middle East conflict, a wobbly US consumer, and a softer Australian rental market. It is clear little else changed, except now there’s another chance for an easy way out. While there is no guarantee it will land, there is hope once again.

Why the debt number matters more than the profit cut

But let’s first focus on the results. In our view, the A$3 to A$4 million reduction in underlying NPAT isn’t as big a deal as the news that net debt is going to finish the year roughly A$70 million higher than guided in February.

Management points out that headroom across bank debt and asset financing facilities still exceeds A$300 million, and that the company sits comfortably within covenants. That is true, and worth saying. But a balance sheet moving the wrong way by this magnitude inside one half is the kind of thing that complicates any future capital decision.

The reassuring caveat is that vehicle inventory is a flexible lever. THL says it will moderate planned vehicle purchases and let the net debt position unwind progressively. We think that is achievable, but it depends on rental demand staying intact while production is throttled back.

Canada is carrying the rentals story, the US and Australia are not

On the operating side, Canada is genuinely strong. THL is guiding to a record summer and says forward indicators support a positive read into calendar 2027. That matters because Canada has been one of the more resilient outbound RV markets in the post-tariff travel reshuffle.

The US picture is more mixed. Forward bookings are trending above last year, but management openly admits the degree of recovery into 2027 is uncertain. Australia’s domestic rental business has weakened on fuel cost concerns and softer consumer confidence, and New Zealand summer demand hinges on long-haul flight prices easing.

The September to October window is the one to mark in the diary. THL has flagged that period as the key booking window for the 2026/27 summer, and if the Middle East situation drags on, the impact on Australia and New Zealand summer trade will get more material.

The restructuring is doing what restructuring should

The strategic clean-up is actually progressing well. The UK and Ireland business has been divested, Australian manufacturing has been consolidated into New Zealand, and the Australian retail business has closed underperforming sites and improved working capital.

The unfinished piece is North America. Management says the region continues to perform below return-on-funds-employed expectations, and is exploring a range of options to lift performance and unlock value. That is corporate language that usually precedes either a partial sale, a JV, or a meaningful operational reset.

Worth noting that for a company carrying nearly half a billion in net debt against this kind of earnings base, sorting North America is no longer optional.

Another Takeover Bid

In a separate announcement, the company revealed another takeover offer was made, with this one at NZ$3.10 vs the prior NZ$2.30 bid. The bid will expire at 5pm in 2 weeks (on Friday June 12) and was made by the same consortium, inckluding private equitor BGH and the Trouchet family. The parties own 19.9% of shares and shareholders owning another 16% of shares are apparently in favour of engaging and granting it due diligence – thl revealed this to its shareholders.

We think the previous takeover episode left a mark. Shareholders who hoped for the NZ$2.30 exit are now holding a business with a heavier balance sheet, a profit base around A$40 million, and a recovery thesis tied to consumer confidence in markets management cannot control. By this point, we think investors will have little confidence things will improve, at least for a while, so taking the ‘easy way out’ will be tempting. Our previous coverage of the takeover dynamics is at stocksdownunder.

The Investors Takeaway for Tourism Holdings

But let’s assume nothing comes of this and the THL business continues as a going concern. The standalone investment case for THL now hinges on two things. The first is whether the company can throttle vehicle purchases enough to bring net debt down, without weakening the rental fleet ahead of what could be a stronger 2027 travel cycle. The second is what happens with the North American operation.

To that end, September through October is the window that will tell us whether the summer 2026/27 rental book holds up. If it does, THL’s debt unwind plan is credible. If it slips, the conversation about North American options gets a lot more urgent.