Accor to accelerate expansion after profit
Accor will accelerate an expansion plan after the French company reported first-half profit that beat analysts’ estimates.
Accor has exceeded market expectations by posting a first half-year profit before interest and taxes of €212 million, an increase of 10.1% on a like-for-like basis from the same period last year. Revenue increased 3.6% on a like-for-like basis to €2,717 million. Upscale and midscale hotels’ revenue rose 0.7% as reported and by 3.5% on a like-for-like basis. Economy brand properties’ revenues increased 4.5% as reported and 4.0% on a like-for-like basis – despite the economic uncertainties in Europe and other parts of the world.
The company underwent record expansion that added 141 hotels (20,700 rooms) including the Mirvac acquisition in Australia.
Chief executive officer Denis Hennequin said that earnings gained from a combination of revenue growth and higher margins Accor scales back the company’s ownership of the hotels that it operates. “These results reflect a strong growth in our performance,” Mr Hennequin said on a conference call. By the end of 2016, 80% of Accor’s hotels will be franchised or under management contracts from 56% now, he said. The company expects to add 108,700 rooms by then.”
Accor agreed last month to acquire Grupo Posadas for $275 million to boost its presence in Brazil.
The company will complete the sale of Motel 6 in North America to Blackstone for $1.9 billion.
Highlights included:
- Solid growth in revenue, up 3.6% like-for-like2 to €2,717 million
- Strong improvement in EBIT, up 10.1% like-for-like to €212 million
- Sharp increase in operating profit before tax and non-recurring items, up 27.4% like-for-like to €190 million
- Net profit of €80 million, before the impact of the Motel 6 disposal
- Ongoing deployment of the asset management program, with the disposal of 59 hotels over the first-half reducing adjusted net debt by €283 million
- Full year EBIT target of €510-530 million
First-half 2012 was shaped by: A solid performance in every segment, led by steadily rising room rates
- A sharp 10.1% like-for-like improvement in EBIT, to €212 million, in particular thanks to the success of the asset management strategy
- A recurring free cash flow generation at €140 million
- Record expansion that added 20,700 new rooms, or 141 hotels, including Mirvac
- The signature on May 22 of an agreement to sell Motel 6 to Blackstone
- The effective launch of the Ibis megabrand program, with 661 hotels rebranded to date
- The issue in June of a €600-million in five-year, 2.875% bond
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