Accor: Excellent Results in 2007 - A Strategy Which Is Paying Off
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Accor: Excellent Results in 2007 - A Strategy Which Is Paying Off
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Category: Worldwide
This is a press release selected by our editorial committee and published online for free on 2008-02-27
- Operating Profit Before Tax up 25%
- Operating Profit Before Tax and Non-Recurring Items up 25% to EUR907 Million
- Net Profit, Group Share up 76% to EUR883 million
- Earnings Per Share up 76% to EUR3.92
- Ordinary Dividend up 14% to EUR1.65 Per Share
- New Return to Shareholders of EUR750 Million (Subject to Shareholders' Approval at the Annual General Meeting):
- Special Dividend of EUR1.50 Per Share - Share Buyback of EUR400 Million
Excellent Results in 2007
The Board of Directors met on February 26, 2008 under the
chairmanship of Serge Weinberg and approved the financial statements for the year ended December 31, 2007.
(in EUR millions) 2006 2007 % Change % Change
reported L/L (1)
Revenue 7,607 8,121 +6.8% +6.5%
EBITDAR 2,084 2,321 +11.4% +9.2%
EBITDAR margin 27.4% 28.6% +1.2pt +0.7pt
Operating profit 727 907 +24.8% +21.6%
before tax
and non-recurring
items
Net profit, Group 501 883 +76.2%
share
(1) L/L: Like-for-like (excluding changes in scope of
consolidation and exchange rates)
- Growth in revenue and improved margins : operating profit
before tax up 25%
Consolidated revenue grew by a reported 6.8% in 2007. At
constant scope of consolidation and exchange rates, the like-for-like increase was 6.5%, reflecting strong growth in the Group's two core businesses, Services and Hotels.
Services revenue rose 11.9% like-for like and 16.5% on a
reported basis, in line with the Group's medium-term organic growth target for this business of between 8% and 16%.
The Hotels business was boosted by the continued upturn in the hotel cycle in Europe that began in mid-2005, both in terms of occupancy rates and average rates. This trend fueled a 6.4% increase in like-for-like revenue from the region. Worldwide, Hotel revenue rose by 5.8% at constant
scope of consolidation and exchange rates and 7.8% on a reported basis.
Consolidated Ebitdar amounted to EUR2,321 million, up 11.4%
from the reported 2006 figure. Ebitdar margin reached 28.6%, an historic record margin for Accor, gaining 0.7 points like-for-like and 1.2 points on a reported basis.
Services reported an Ebitdar margin of 42.6% for 2007, a
2.1-point like-for-like improvement that confirmed the business' excellent performance in all its markets.
The Hotels business achieved an Ebitdar margin of 32.0% for
2007, a 0.8 points improvement compared to 2006 on a like-for-like basis.
This increase translates the favorable hotel cycle in Europe, an improved operating performance (in particular as a result of dynamic pricing and cost-reduction measures in France and Germany), and moves to adapt hotel ownership structure. This reflects improvements of 0.7 points in the Upscale and Midscale segment, 0.9 points in European Economy Hotels and 1.3 points in US Economy Hotels.
Operating profit before tax and non-recurring items totaled
EUR907 million, an increase of 21.6% like-for-like (after 28.7% in 2006).
This is higher than the target of EUR870-EUR890 million announced by Accor in August 2007.
- Strong 76% increase in net profit, Group share
Net profit, Group share rose 76.2% over the year to EUR883
million. This includes EUR319 million in capital gains on real estate disposals in the United Kingdom, Germany and the Netherlands, a capital gain of EUR204 million on the disposal of Go Voyages and a capital loss of EUR174
million recognized in connection with the sale of Red Roof Inn.
Earnings per share grew by 75.6% to EUR3.92 from EUR2.23 in
2006, based on the weighted average 225 million shares outstanding during the year.
Earnings per share after tax came to EUR2.86, up 24.3% from
2006.
At the Combined Annual and Extraordinary Shareholders' Meeting on May 13, 2008, shareholders will be asked to approve an ordinary dividend of EUR1.65, to be paid on May 20, 2008. This represents a 13.8% increase from
the year before and corresponds to 58% of operating profit before non-recurring items, net of tax (1), compared with 63% in 2006. The payout ratio is expected to gradually trend towards 50% in the next three years.
- Solid financial position
Net debt amounted to EUR204 million at December 31, 2007,
after taking into account EUR1,198 million in development expenditure (of which EUR821 million in the Hotels business and EUR335 million in Services) and EUR1,635 million in proceeds from asset disposals. Out of those, EUR540
million came from the disposal of non-strategic assets (notably Go Voyages for EUR280 million), and EUR1,095 million from the hotel asset management strategy, including the divestment of Red Roof Inn for EUR377 million.
Dividends paid in 2007 amounted to EUR680 million, versus
EUR276 million in 2006, including a special dividend of EUR1.50 per share for a total payout of EUR336 million. Equity was reduced by EUR1,200 million during the year through the buyback of Accor SA shares in May (EUR700
million) and August (EUR500 million).
The main financial ratios improved significantly, reflecting
the Group's robust financial position. Gearing stood at 6% at December 31, 2007 versus 11.3% one year earlier. The ratio of funds from operations before non-recurring items to adjusted net debt(2) improved by 4.0 points over the
year to 26.2%, while return on capital employed (ROCE (3)) reached a record 13.6% at year-end compared with 11.9% at December 31, 2006.
Achievements In Line With Strategic Objectives
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