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Published:
Accor: High Quality First-Half 2008 Results PARIS, August 28 /PRNewswire-FirstCall/ --
- Solid first-half revenue performance: up 5.2%
like-for-like(1), up 11.8% in Services and up 5.1% in Hotels
- Improvement in operating margin: 0.8 points like-for-like,
particularly a strong increase in Services (up 1.1 pt)
- Operating profit before tax and non-recurring items: EUR393
million, up 16.0% like-for-like and 25.0% like-for-like and excluding
the impact of the return to shareholders
- Sharp improvement in profitability: ROCE(2) of 14.5%, vs.
12.8% at June-end 2007
- Full-year target for operating profit before tax and
non-recurring items: between EUR910 million and EUR930 million, up
16.0% like-for-like and excluding the impact of the return to
shareholders
At a time of transformation The Group's first-half 2008 results reflect the impact of the strategic initiatives deployed since early 2006. Disposals of non-strategic businesses and restructuring of real estate to improve profitability To refocus the Group on its two core Hotels and Services businesses, a
number of non-strategic assets have been sold, for a total of As part of the Hotels business' "Asset Right" strategy, hotel ownership
structures have been changed in a commitment to improving return on capital
employed and reducing earnings volatility. This process has generated nearly
This strategy has also benefited Accor shareholders, who have had
This transformation has one-off impacts on interim results:
- Revenue declined 6.2% (EUR249 million) year-on-year, due to
a loss of 12.6% (EUR507 million) in revenue from asset disposals.
- Operating profit before tax and non-recurring items rose by
3.6% as reported, reduced by 4% (EUR14 million) due to asset sales
and 9% (EUR35 million) due to the return to shareholders.
On a like-for-like basis, operating profit before tax and
non-recurring items increased by 16.0%, and by 25.0% excluding the impact
on financial expense of the return to shareholders.
- Net profit stood at EUR310 million versus EUR596 million in
first-half 2007, a 48.0% decline that primarily reflected the EUR255
million decrease in capital gains.
This transformation has long-term positive impacts on Group
performance:
- Operating margin, improved by 1.6 points over the period.
- Return on capital employed, at 14.5% at June 30, 2008, has
improved by 1.7 points since June 30, 2007. The Group has disposed
of EUR749 million in US Economy Hotels assets and EUR653 million in
non-strategic assets, while at the same time focusing on higher return
businesses like Economy Hotels in Europe, with a 22.8% ROCE, and
Services, with a 21.0% ROCE at June 30, 2008.
- A less cyclical Group: Accor is now relying on the two
businesses - Economy hotels in Europe and Services - that are low
cyclical businesses and account for nearly 70% of EBIT compared to 44%
in 2001. Those two activities proved strong resilience during the last
cycle (2001-2003). In first half 2008, their combined margin improved
by 1.0 point.
As a result of those transformations, the full-year target is to report
profit before tax and non-recurring items of between Anticipating an economic environment that might remain difficult in 2009,
Accor will implement an
High quality first-half 2008 results
(in EUR millions) H1 2007 H1 2008 % Change % Change
reported Like-for-like
Revenue 4,015 3,766 -6.2% +5.2%
EBITDAR 1,095 1,088 -0.6% +7.9%
EBITDAR margin 27.3% 28.9% +1.6 pts +0.8 pts
Operating profit before tax 379 393 +3.6% +16.0%
and non-recurring items
Net profit, Group share 596 310 -48.0%
ROCE 12.8% 14.5% +1.7 pts
Consolidated revenue totaled EBITDAR amounted to Services Services delivered a good set of results in first half. EBITDAR margin stood at 42.4% for the period, a 1.1-point like-for-like increase. This performance confirms the business' robust performance in its core markets, in spite of the loss of a contract inBelgium and the change in tax law in Argentina. Furthermore, the Services started to migrate from paper vouchers to cards, improving the operating margin. As a result, EBITDAR margin in Europe was up 0.3 points with a flow-through rate(3) of 49%. InLatin America, EBITDAR margin improved by 2.0 points and the flow-through rate reached 64% overall and 77% inBrazil, where the EBITDAR margin gained 3.1 points. Upscale and Midscale Hotels In Upscale and Midscale Hotels, EBITDAR margin widened by a 0.5 points like-for-like to 27.7%, with a flow-through rate of 35%. InFrance, revenue was up 6.8% and EBITDAR margin increased by 0.4 points like-for-like. The effective flow-through rate of 34% would have been 49% excluding the negative impact of the January 1 discontinuation of payroll tax relief on low salaries. InEurope (excludingFrance), revenue and EBITDAR margin increased respectively by 3.7% and 0.8 points, with a flow-through rate of 52%. Economy hotels (outsidethe United States) In Economy Hotels, EBITDAR margin improved by 1.0 point like-for-like to 35.8%, with a flow-through rate of 53%. InFrance, like-for-like revenue increased by 5.4%, with flow-through rate of 22% reflecting the impact of both F1 hotel renovations and the above-mentioned discontinuation of payroll tax relief on low salaries since January 1. Adjusted for these impacts, the flow-through rate would have been 36% for the period. InGermany, revenue improved by 4.1% like-for-like with a flow-through rate of 72%, while in the UK, the flow-through rate was 68%, with revenue up 8.5% like-for-like. Economy Hotels inthe United States In Economy Hotels in the US, EBITDAR margin improved by 0.2 points to 37.9% in a difficult economic environment, demonstrating disciplined control of costs. EBIT rose by 1.8% to Operating profit before tax and non-recurring items amounted to Net profit, Group share came to Operating profit before non-recurring items, net of tax amounted to
Net earnings per share amounted to Funds from operations totaled Net debt amounted to The main financial ratios reflect the Group's robust financial position. Gearing stood at 28.0% at June 30, 2008, while the ratio of adjusted funds from operations to adjusted net debt(4) came to 24.2%. Return on capital employed continued to improve, rising to 14.5% at June 30, 2008, from 12.8% at June 30, 2007. ROCE in the Hotels business has improved by 2.9 points since December 31, 2006, from 11.1% to 14.0% at June 30, 2008. Significant progress in implementing the strategic plan Accor Services: extending the range of prepaid services and products Active in the prepaid market for more than 40 years with Ticket Restaurant meal vouchers and Ticket Alimentation food vouchers, the Services business is expanding its lineup with Prepaid Gifts, Prepaid Car and Prepaid Transport products to meet the expectations of employers and employees alike. This development is being led by a growing emphasis on new technological solutions, such as smart cards and cell phones, as well as on innovative marketing techniques.
In first-half 2008, Accor Services launched:
- The UUB prepaid card, aimed at Un- and UnderBanked employees
in the United Kingdom.
- The Commuter Check card (transit and parking) in the United
States to promote the use of public transportation.
- The "Ma Kadeos" range of customizable gift cards.
Accor Services is relying on acquisitions that enable it either to
strengthen its technological expertise - as was the case with UK-based Prepay
Technologies, acquired in 2007 - or to immediately increase market share. An
annual budget of The Services business is also enjoying sustained organic growth in revenue of 8% to 16% a year in accordance to Group's objectives, with increases of 15.5% in 2006, 11.9% in 2007 and 11.8% in first-half 2008. Ramp-up of the Hotel brands The repositioning of Sofitel in the Luxury segment has led to the rebranding of 19 hotels since 2007 and to a 9.7% increase in average room rates for the period. At June 30, the Sofitel network was comprised of 161 hotels, of which 68 will display the new visual identity by the end of 2008. A number of high-profile units are undergoing renovation, including Sofitel Amsterdam The Grand, Sofitel Aswan Old Cataract in and Sofitel Brussels Le Louise. The July rollout of the "Life is Magnifique" advertising campaign has revitalized the brand's visibility. Pullman, the new Upscale brand launched last December, performed well in the first half, with RevPAR rising by 3.5% for a network comprised of 20 hotels at June 30, 2008. Forty-six new hotels are already planned, including 30 rebrandings and 16 openings. In the non-standardized Economy segment, the All Seasons brand introduced in September 2007 already had a network of 14 hotels inFrance at June 30. In addition, 50 new hotels are commited, including 35 openings and 15 rebrandings. MGallery and Accor Loyalty program scheduled for launch in September The MGallery label, designating a collection of upscale hotels with distinctive personality comprised of rebranded Mercure and Sofitel units, will be introduced on September 3. Accor Hospitality's new online, multi-brand loyalty program will be launched on September 12, with deployment in 2,000 hotels in 80 countries. Further expansion in the Hotels business During the first half, 11,000 rooms were opened, of which 37% inEurope, 31% inAsia-Pacific, 19% in other emerging markets, and 13% inNorth America. InChina, where the network includes 63 hotels, expansion has been especially robust, as illustrated by the openings of the Novotel Beijing West and Mercure Wanshang inBeijing in time for the Summer Olympics. At June 30, 2008, there were 86 hotels in the pipeline, including 24 new contracts signed in the first half. In all, there were 101,000 rooms in the pipeline at June 30, 2008, compared with 93,000 at December 31, 2007. A total of 23,000 rooms were signed during the first half, compared with 21,325 during the prior-year period. Hotel property disposals proceeding as scheduled Of the targeted Outlook for 2008 Business in July In the Services business, revenue increased by 16.3% like-for-like in July. During the month, like-for-like RevPAR in the Upscale and Midscale Hotels inEurope rose by 3.0%, with increases of 4.2% inFrance, 4.7% inGermany and 0.4% in the rest ofEurope. In Economy Hotels inEurope, like-for-like RevPAR was up 1.7% overall, rising 3.1% inFrance, 1.0% inGermany, and 0.4% in the rest ofEurope. These trends confirm the resistance of the Group's two core markets,France andGermany. In Economy Hotels in the US, RevPAR was down 3.0% in July, in line with the market.
- 2008 earnings objective
Over the full year, the Group is aiming to report profit
before tax and non-recurring items of between EUR910 million to EUR930
million. This target takes into account the following factors:
- Growth in profit before tax and non-recurring items
(excluding the impact of the return to shareholders) of 25% in the
first half and of around 10% in the second, in light of the less
favorable economic environment.
- An additional negative EUR85-million impact on profit before
tax of the Group transformation which is made of a negative EUR55-
million impact on net financial expense of the return to shareholders
(share buybacks and the payment of special dividends in 2007 and 2008)
and a negative EUR30-million impact of assets divested in 2007-Go
Voyages, the Foodservices in Italy and Brazil, and Red Roof Inn.
- An estimated negative EUR40-million currency effect due to
the weak US dollar and British pound.
- An estimated negative EUR17-million impact of expansion
(hotel openings or acquisitions).
This earnings objective would represent around 16% growth in profit before tax like-for-like for the year, excluding the impact of the return to shareholders.
Upcoming events
- October 14: Third-quarter revenue
- October 20, 21 & 22: Investor Days
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(1) At constant scope of consolidation and exchange rates.
(2) Return on capital employed (ROCE) corresponds to EBITDA expressed as a percentage of fixed assets at cost plus working capital. (3) Defined as the like-for-like change in EBITDAR expressed as a percentage of the like-for-like change in revenue. (4) The ratio of funds from operations before non-recurring items to adjusted net debt is calculated according to a method used by the main rating agencies, with net debt adjusted for the 8% discounting of future minimum lease payments and funds from operations adjusted for interest expense on these payments. Funds from operations before non-recurring items corresponds to cash flow from operating activities before non-recurring items and changes in working capital requirement. SOURCE Accor Tags: ,LEI,RLT,ERN,Accor _ _     Is your favorite bookmark site missing? Ask for it. |
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