Accor - 2009 Annual Results
PARIS, February 24, 2010- 2009 Operating Profit Before Tax(1) of EUR448 Million, at the Upper End
of the EUR400-450 Million Target
Dividend of EUR1.05 per share recommended at the June 29, 2010 Annual
Meeting
Prepaid Services: resilient EBITDAR margin despite a difficult economic
and business environment
Hotels: limited decline in EBITDAR margin thanks to greater than expected
cost-savings
- Operating profit before tax and non-recurring items: EUR448
million, at the upper end of the announced EUR400-450 million target,
despite the EUR39 million negative impact from the devaluation of the
Venezuelan bolivar
- Limited 1.5 point decline in EBITDAR margin to 28.0%
- Net loss of EUR282 million due to the impact of impairment losses and
restructuring costs totaling EUR514 million
- Solid financial position, with a funds from operations/adjusted net
debt ratio of 20.0%(2); EUR2.5 billion in unused confirmed lines of
credit
2009 Results
(in EUR millions) 2008(4) 2009 Change Change
(reported) (like-for-like)(3)
Revenue 7,722 7,065 - 8.5% - 7.9%
EBITDAR 2,290 1,976 - 13.7% - 12.5%
EBITDAR margin 29.7% 28.0% -1.7 pts -1.5 pts
Operating profit before tax 875 448 - 48.9% - 38.0%
and non-recurring items
Operating profit before 603 328 - 45.6% n/a
non-recurring items, net of
tax
Net loss, Group share 575 (282) n/a n/a
1: Operating profit before tax and non-recurring items
2: Adjusted funds from operations to adjusted net debt is calculated
with net debt adjusted for the 8% discounting of future minimum
lease payments.
3: Excluding changes in scope of consolidation and exchange rates
4: Impact of the retrospective application of IFRIC 13 - Customer Loyalty
Programs from January 1, 2008
- Operating profit before tax and non-recurring items of EUR448 millions
Consolidated revenue totaled EUR7,065 million in 2009,
representing a decline of 7.9% at comparable scope of consolidation and
exchange rates (like-for-like) and of 8.5% as reported. Reported revenue was
adversely impacted by a difficult economic environment as well as by asset
disposals (which reduced growth by 3.5%) and the negative 1.4% currency
effect.
- The slight 1.4% like-for-like increase in Prepaid Services
revenue (down 3.6% as reported), including operating revenue rise of
3.9% like-for-like reflected its strong, sustainable growth
fundamentals, in spite of the year’s exceptionally severe global
crisis. Financial revenue was down 15.0% like-for-like by the fall in
interest rates.
- Hotels revenue contracted by 10.1% like-for-like and 9.8% on
a reported basis, highlighting the greater resilience of the Economy
segment in Europe and reflecting a slight upturn in business at year-
end. In all, revenue declined by 6.1% in the Economy segment, 11.5% in
Upscale and Midscale hotels, and 13.8% in the US Economy segment, which
has yet to show any signs of a recovery.
Consolidated EBITDAR amounted to EUR1,976 million, for an
EBITDAR margin of 28.0%, down 1.7 points as reported and 1.5 points
like-for-like compared with 2008.
- Prepaid Services showed a limited 0.3 point like-for-like
decline in EBITDAR margin to 41.8%, confirming its resilience despite
rising unemployment and falling interest rates. Adjusted for financial
revenue, EBITDAR margin rose by 1.2 points like-for-like. EBITDAR
margin on issue volume amounted to 3.2% in Europe and 3.3% in Latin
America.
- EBITDAR margin in the Hotels business contracted by 2.6
points like-for-like to 29.1%. Like-for-like margin declines were
limited in Upscale and Midscale hotels (down 2.5 points, of which 4.1
points in the first half and 1.0 point in the second) and in the
Economy segment (down 1.7 points, of which 2.3 points in the first half
and 1.1 point in the second) thanks to the deployment of significant
cost-cutting plans during the year, which reduced operating costs by
EUR165 million, versus a target of EUR150 million, and support costs by
EUR87 million, versus a target of EUR80 million. Response ratios stood
at 53.3% in the Upscale and Midscale segment and 37% in the Economy
segment. EBITDAR margin in the US Economy Hotels business continued to
decline, losing 6.6 points like-for-like during the year in a still
deeply unfavorable economy.
Operating profit before tax and non-recurring items amounted
to EUR448 million for the year, at the upper end of the target announced in
August 2009, despite the EUR39 million negative impact from the devaluation
of the Venezuelan bolivar. This represented a 38.0% decline like for-like, of
which 44.5% in the first half and 32.7% in the second.
- A loss for the year, heavily impacted by impairment losses and
restructuring costs
The net loss, Group share came to EUR282 million for the year,
reflecting the following factors:
- EUR387 million in impairment losses, of which write-downs of
EUR113 million on Motel 6 goodwill and EUR100 million on Kadeos
Intangible assets.
- EUR127 million in restructuring costs.
The loss per share stood at EUR1.27, compared with earnings of
EUR2.60 per share in 2008, based on the weighted average 223 million shares
outstanding during the year.
Before taking into account the above-mentioned non-recurring
items, operating profit before
non-recurring items, net of tax amounted to EUR328 million,
versus EUR603 million in 2008. Operating profit before non-recurring items,
net of tax per share came to EUR1.47, down 46% from 2008.
At the Annual Meeting on June 29, 2010, shareholders will be
asked to approve the payment of a dividend of EUR1.05 per share, compared
with EUR1.65 the year before. This would represent a payout of more than 70%
of 2009 operating profit before tax and non-recurring items.
- A solid financial position
Net debt stood at EUR1,624 million at December 31, 2009. Cash
outflows for the year included two non-recurring items: the acquisition of an
additional 15% interest in Groupe Lucien Barriere for EUR271 million and the
payment of EUR242 million to the French State in settlement of tax
assessments on Compagnie Internationale des Wagons Lits. Adjusted for these
two items, cash flow for the year would have been break-even.
Recurring cash flow items include:
- EUR327 million in renovation and maintenance expenditure, in
line with objectives and down EUR161 million from 2008 thanks to
disciplined capital expenditure management.
- EUR495 million in expansion expenditure (excluding the
Groupe Lucien Barriere put), representing a decline of EUR596 million
Over the year compared to 2008.
- EUR363 million in proceeds from disposals of assets,
primarily stemming from sustained implementation of the Group asset-
right strategy (216 hotels were sold in 2009 for EUR290 million),
despite the particularly unfavorable real estate market during the
year.
- EUR396 million in dividends paid in 2009.
As of December 31, 2009, Accor had EUR2.5 billion in unused,
confirmed lines of credit and no major refinancing needs before 2012.
The main financial ratios attest to the solidity of the
Group’s financial position. Gearing stood at 50% at December 31, 2009, while
the ratio of funds from operations before non-recurring items to adjusted net
debt[1] came to 20.0%.
Return on capital employed (ROCE)[2] amounted to 10.5% at December 31,
2009, versus 14.1% a year earlier.
[1] Funds from operations before non-recurring items corresponds to cash
flow from operating activities before non-recurring items
and changes in working capital requirement. 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.
[2] Corresponding to EBITDA expressed as a percentage of fixed assets at
cost plus working capital
Sustained deployment of the asset-right strategy in a
depressed real estate market
A total of 216 hotels were restructured in 2009, leading to a
EUR360 million reduction in adjusted net debt over the year.
In particular, 157 hotelF1 properties representing 12,174
rooms were sold and leased back in the second half, a major transaction that
enabled Accor to reduce its adjusted net debt by EUR214 million in 2009.
As of December 31, 2009, 60% of the rooms in the hotel base
were held under variable-rent leases, management contracts or franchise
agreements.
In February 2010, the Group announced the further sale of five
hotels, comprising more than 1,100 rooms in four European countries.
Undertaken with the Invesco Real Estate hotel investment fund, the
transaction covered the sale and variable leaseback of two Novotel and two
Mercure units and the sale and management-back of one Pullman property. The
EUR154 million disposal will have a EUR93 million impact on adjusted net debt
in 2010.
A dynamic hotel expansion drive, aligned with new market
realities
To optimize earnings, Accor is focusing its expansion capital
expenditure on the Economy Hotels outside the US segment and emphasizing
asset-light operating structures in the Upscale and Midscale segment.
Of the more than 27,300 new rooms opened in 2009, for example,
more than 80% were in the Economy and Midscale segments and 81% concerned
asset-light ownership structures based on variable-rent leases, management
contracts or franchise agreements. Most of the rooms were opened in high
potential regions, such as Asia (35%) and Europe (32%).
As of December 31, 2009, there were around 103,000 rooms in
the pipeline, of which half were in the Economy or Budget segments and more
than 85% were held under asset-light structures.
2010 trends and outlook
- Hotels
With the exception of Economy Hotels in the US, occupancy
rates continued to stabilize in January 2010, in line with the December 2009
trend. In the Upscale and Midscale segment in Europe, occupancy rate rose 0.3
points over the month, compared with an increase of 0.4 points in December
and a decline of 2.8 points in November. In Economy Hotels in Europe, the
rate was down 2.2 points in January, versus declines of 1.6 points in
December and 5.2 points in November. Average room rates generally stabilize
three to nine months after occupancy rates.
- Prepaid Services
The sustained rise in unemployment, particularly in Europe, is
expected to further impact growth in operating revenue, notably in the first
half. The environment should be more favorable in emerging markets, where the
increase in people in work is expected to drive stronger revenue growth.
Financial revenue, on the other hand, will continue to be held
back by declining interest rates in the first half, before stabilizing in the
second half.
Upcoming events
- April 20: First-quarter revenue
- June 29: Extraordinary Shareholders’ Meeting
Accor, a major global group and the European leader in hotels, as well as
the global leader in services to corporate clients and public institutions,
operates in nearly 100 countries with 150,000 employees. It offers to its
clients over 40 years of expertise in two core businesses:
- Hotels, with the Sofitel, Pullman, MGallery, Novotel, Mercure,
Suitehotel, Adagio, ibis, all seasons, Etap Hotel, Formule 1, hotelF1 and
Motel 6 brands, representing 4,100 hotels and nearly 500,000 rooms in 90
countries, as well as strategically related activities, Thalassa sea&spa,
Lenotre, CWL.
- Services, with 33 million people in 40 countries benefiting from Accor
Services products in employee and constituent benefits, rewards and
incentives, and expense management.
Source: Accor
Media Contact: Armelle Volkringer, Senior vice president corporate communications and external relations, Phone: +33(0)1-45-38-87-52; Charlotte Bourgeois-Cleary, Phone: +33-1-45-38-84-84; INVESTORS CONTACTS, Eliane Rouyer-Chevalier, Senior Vice President Investor Relations and Financial Communications, Phone: +33-1-45-38-86 26; Solene Zammito, Deputy Director, Investor Relations, Phone : +33-1-45-38-86-33
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