Accor 2011 Earnings Rise on Budget Hotels, Emerging Markets
February 23, 2012, 2:25 AM ESTBy Julie Cruz
(Updates with executives’ comments starting in eighth paragraph.)
Feb. 22 (Bloomberg) -- Accor SA, Europe’s biggest hotel company, reported a 19 percent gain in full-year profit and said fourth-quarter business patterns continued into January, boosted by growth in budget lodgings and emerging markets.
Earnings before interest and tax rose to 530 million euros ($702 million) from 446 million euros a year earlier, the Paris- based company said today in a statement. Profit was at the top end of Accor’s forecast of 510 million to 530 million euros and beat the 523.7 million-euro average of 17 analyst estimates compiled by Bloomberg.
The hotelier, which generates about three-quarters of revenue in Europe, is renovating economy lodges and combining them under the Ibis brand to win travelers. By selling freeholds and signing agreements to operate or franchise most of the properties, Accor reduced net debt by about two-thirds last year while adding a record 38,700 rooms.
“Despite the uncertain economic environment, business is holding firm,” Accor said. The hotelier said it sees growth opportunities in Asia and Latin America and expects to benefit this year from events including the London Olympics, European soccer finals in Poland and trade fairs in Germany.
Stock Rises
Accor rose as much as 5.9 percent and was up 4.6 percent at 27.40 euros as of 11:34 a.m. in Paris, the highest price since Aug. 4. The shares have jumped 40 percent this year, the steepest gain among the 21 members of the Stoxx 600 Travel/Leisure Index, which has climbed 6.8 percent.
Growth in 2012 will be mainly from existing operations, though Accor doesn’t rule out acquisitions, Chief Executive Officer Denis Hennequin told journalists on a conference call.
The hotelier said it “amply” exceeded its expansion target of 35,000 new rooms in 2011, and reiterated an aim to add a further 40,000 rooms this year. The Asia-Pacific region will represent about “45 percent of Accor’s pipeline of development” in 2012, Hennequin said.
Accor will also pursue its brand strategy in 2012, including re-branding the Ibis chain and expanding luxury divisions that include the Pullman and Sofitel brands. Accor plans to double the Pullman network by 2015, Hennequin said.
‘Excellent Financial Health’
The company will pay shareholders a dividend of 1.15 euros a share, including a special payment of 50 cents a share, which it said reflects “excellent financial health.”
Net debt was 226 million euros at the end of last year, down from 730 million euros in 2010. Hennequin said in October that Accor would end 2011 with almost no borrowings.
“The main surprise is the strength of the dividend,” Simon Champion, a London-based analyst at Deutsche Bank AG, wrote in a report today.
The hotelier doesn’t exclude a sale of its North American Motel 6 brand as it continues restructuring, Chief Financial Officer Sophie Stabile told journalists. Cash flows in 2012 will be used to invest in existing infrastructure, for acquisitions and restructuring and to pay a dividend, Stabile said at a conference today.
The company reported last month that revenue in 2011 rose 2.5 percent to 6.1 billion euros. Fourth-quarter sales fell 1.1 percent to 1.5 billion euros, affected by a strategy of selling and leasing back hotels, the company said at the time.
--Editors: Paul Jarvis, Tom Lavell
To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net
To contact the editor responsible for this story: Sara Marley at smarley1@bloomberg.net
