NH Hotel Group reports net profit of €100 million, underpined by business growth, enhanced efficiency, deleveraging and the asset rotation strategy
Period highlights: earnings growth, EBITDA expansion and solid cash flow generation |
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NH Hotel Group reports net profit of €100 million, underpined by business growth, enhanced efficiency, deleveraging and the asset rotation strategy
Period highlights: earnings growth, EBITDA expansion and solid cash flow generation |
Category: Worldwide - Industry economy
- Figures / Studies
This is a press release selected by our editorial committee and published online for free on 2018-11-16
- Group revenue increased by 3.6% (+5.5% in constant currency terms) to €1.2 billion, driven by business momentum in Europe, which more than offset the impacts of adverse currency evolution in Latin America and the hotels under refurbishment in 2018
- Outperformance relative to its competitors in the main destinations where the Group operates fuelled growth in revenue per available room (RevPAR) of 2.0%, shaped mainly by growth in the ADR of 1.5%
- The effective combination of revenue growth and cost control drove EBITDA(1) to €187 million, up €17 million from the first nine months of 2017, implying a revenue growth-to-EBITDA(1) conversion ratio of 41%
- The reduction in interest expense on the back of the deleveraging effort led to significant growth in recurring net profit to €51 million, year-on-year growth of nearly 100%, such that bottom-line expansion considerably outpaced EBITDA(1) growth
- Reported net profit came in at a record €100 million, up €75 million year-on-year, underpinned by business momentum, improved efficiency and the contribution of the asset rotation initiatives undertaken in 2018
- Solid operating cash flow generation left the Group with a cash balance of €273 million, reducing net debt to €208 million
-Positive guidance for 2018*-Thanks to the favourable trend in the hotel business so far this year, combined with the positive outlook, the Company is in a position to reiterate its guidance for EBITDA(1) of €260 million this year and for a significant reduction in net financial debt leverage to 0.8-1.0x by year-end (initial objective announced at the beginning of the year: 1.0-1.2x)-Minor International-The acceptance period for the public tender offer presented by Minor International closed with the latter holding 94.1% of the Company's share capital. Minor International is already working with NH Hotel Group on defining the new business plan and identifying synergies derived from the complementary nature of the two businesses with the aim of maximising shareholder value
Today, NH Hotel Group presented its earnings results for the first nine months of 2018. The results extend the Company's healthy performance in the first half of the year, and show a solid revenue growth, outperformance relative to its direct competitors in its main destinations, efficient cost control and the fruits of the efforts made to boost the Group's financial solvency.
NH Hotel Group's CEO, Ramón Aragonés, said “Quarter after quarter we continue to beat the profitability and deleveraging guidance we had committed to, thus making the most of the improved business momentum and enhanced financial liquidity and evidencing our efficient business management. The solidity of our business model coupled with the potential for synergies via our new shareholder Minor International will allow us to face the upcoming years with greater guarantees of success.”-9M18 results*-Consolidated revenue grew once again in the first nine months of the year, by 3.6% (+5.5% in constant currency terms), to €1.2 billion.
The year-on-year topline growth of €41 million was underpinned by strong hotel business momentum in Europe, with Benelux, Italy and Central Europe standing out, where like-for-like revenue growth was 7.0%, 4.4% and 3.1%, respectively. Spain reported revenue growth of 0.7%, despite a tough comp shaped by an exceptional performance last year on the back of one-off conferences in Madrid and market weakness in Barcelona this year. Excluding the latter effect, like-for-like revenue growth in Spain would have been 2.0%. Lastly, Latin America was affected by exchange rate effects, albeit registering like-for-like revenue growth of 16.1% in constant currency terms.
The price management strategy deployed year-to-date has translated into growth in revenue per available room (RevPAR) of 2.0%, driven mainly by price growth of 1.5% and by an increase in occupancy of 0.5%.
The Company once again outperformed its direct competitors in its main destinations as a whole, specifically posting growth in its RevPAR that was 1.7 percentage points higher than that of its competitors.
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