OCTOBER 2021

'Light at the end of the tunnel'

Apollo well positioned to capitalise
on tourism's recovery: CEO

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APOLLO Tourism and Leisure, manufacturers of Winnebago motorhomes and Coromal and Windsor caravans, has reported an after-tax net financial year loss of $17.9 million compared to $61.2 million the previous year.

But in its newly released annual report, chief executive and managing director Luke Trouchet predicts a "light at the end of the tunnel" as COVID-related restrictions begin to ease.

"I believe Apollo is well positioned to capitalise on the recovery in tourism activity," he said.

The report believes that with record RV sales demand, a growing forward rental book and a lower permanent cost base, Apollo is well placed to benefit from the reopening of domestic and international borders and return to profitability.

The company's revenue plunged 20 percent to $283.3 million during the year, mostly thanks to border closures.

However, the company says in periods where domestic borders were open it was able to generate strong demand, with domestic revenues "significantly exceeding pre-COVID-19 levels".

Mr Trouchet said that after successfully negotiating the initial "survival months" following the onset of COVID-19 in the second half of FY20, his company took a step back and critically assessed each area of its business.

The idea was to identify what changes needed to be made to ensure Apollo could navigate beyond the worst of the pandemic and come out the other side stronger and more efficient.

"With international borders remaining closed for most of the year in our operating markets, we pivoted our focus towards domestic rental markets and pleasingly saw a marked increase in rental revenue from domestic guests," Mr Trouchet said.

"In some months, when domestic travel was unrestricted, we achieved higher rental revenues from domestic guests compared to pre-COVID-19 levels.

"This demonstrated the strength of our brand and the appeal of RV holidays to a domestic market."

Demand for RV sales reached record levels throughout the year as customers sought self-drive, alternative leisure activities.

Mr Trouchet said that while strong sales margins were achieved globally, new vehicle delivery volumes in Australia were constrained by COVID-19 related supply chain issues and dealership closures.

"Pleasingly, we now hold a record vehicle sales forward order book in Australia and we anticipate that strong RV sales demand will continue globally throughout FY22," he said.

Apollo had engaged Deloitte to carry a detailed review of its Brisbane manufacturing facility's operations during the year, to ensure the company could satisfy RV demand effectively and sustainably, now and into the future.

Several cost savings and efficiency initiatives were identified and are being implemented.

"The benefits of these initiatives are expected to crystallise in FY22 and beyond," Mr Trouchet said.

"Apollo is focused on managing the business into a post-pandemic world.

"As vaccination programs continue to be successfully executed, we anticipate that tourism markets in our operating regions will commence recovery in CY22, albeit at different speeds.

"The ramp up of vaccine rollouts is now a primary focus in Australia and New Zealand and should provide a clear recovery pathway towards the ending of lockdowns and travel restrictions.

"Apollo is ideally placed to service international and domestic guests looking for 'COVID-19 safe' ways to explore the great outdoors with family and friends.

"We will continue to invest in initiatives focused on stimulating domestic demand and will work with our travel booking partners to rebuild international demand into the 2022 northern hemisphere summer.

"We will purchase or manufacture new rental fleets for all regions in readiness for anticipated FY22 demand. We expect RV sales markets to remain buoyant globally.

Mr Trouchet said constraints experienced by supply chain issues were expected to ease in the latter part of FY22.

"Apollo is confident it has sufficient liquidity and capacity to navigate beyond the current challenges presented by COVID-19 and we believe Apollo is well positioned to return to profitability when borders reopen," he added.

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