Scandic Hotels Group AB
STO:SHOT
US |
Fubotv Inc
NYSE:FUBO
|
Media
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
|
CN |
NIO Inc
NYSE:NIO
|
Automobiles
|
|
US |
Fluor Corp
NYSE:FLR
|
Construction
|
|
US |
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
|
US |
TopBuild Corp
NYSE:BLD
|
Consumer products
|
|
US |
Abbott Laboratories
NYSE:ABT
|
Health Care
|
|
US |
Chevron Corp
NYSE:CVX
|
Energy
|
|
US |
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
|
US |
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
|
US |
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
|
US |
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
|
US |
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
|
US |
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
36.88
75.9
|
Price Target |
|
We'll email you a reminder when the closing price reaches SEK.
Choose the stock you wish to monitor with a price alert.
Fubotv Inc
NYSE:FUBO
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
Uber Technologies Inc
NYSE:UBER
|
US | |
NIO Inc
NYSE:NIO
|
CN | |
Fluor Corp
NYSE:FLR
|
US | |
Jacobs Engineering Group Inc
NYSE:J
|
US | |
TopBuild Corp
NYSE:BLD
|
US | |
Abbott Laboratories
NYSE:ABT
|
US | |
Chevron Corp
NYSE:CVX
|
US | |
Occidental Petroleum Corp
NYSE:OXY
|
US | |
Matrix Service Co
NASDAQ:MTRX
|
US | |
Automatic Data Processing Inc
NASDAQ:ADP
|
US | |
Qualcomm Inc
NASDAQ:QCOM
|
US | |
PayPal Holdings Inc
NASDAQ:PYPL
|
US | |
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Ladies and gentlemen, welcome to the Scandic Hotels Group Report for the Second Quarter of 2019. Today, I'm pleased to present Jens Mathiesen, CEO and President; and Jan Johansson, CFO. [Operator Instructions] Please note this is being recorded. Speakers, please begin.
Yes. Good morning, everyone, and welcome to this call regarding Scandic's second quarter for 2019. I'm Henrik Vikström, Head of Investor Relations. We will, as usual, start with the presentation by our CEO, Jens Mathiesen; and CFO, Jan Johansson. And thereafter, we will open up for questions. So please, go ahead, Jens.
Thank you very much and good morning, everyone. Thank you for joining this presentation of our second quarter results. If you please turn to Page 2 for a brief summary of the period. Here, we will focus on the first half of the year instead of second quarter in order to avoid the calendar effects related to the timing of the Easter between the 2 quarters of the year. The development in January to June, it actually gives us a more accurate picture of the underlying development of Scandic. The reported sales growth of 4.5% in the first 6 months of 2019 and the like-for-like growth was 0.2%. As you may recall, our like-for-like revenue growth was marginally negative in Q1 adjusted for calendar effects, so we did see a slight improvement in the underlying trend in the second quarter of the year. We saw quite strong demand growth on all our markets, and I would specifically like to mention Norway where the market fully absorbed the effects from increased capacity in Oslo, which was very encouraging to see. We recorded adjusted EBITDA of SEK 719 million in the first half of 2019 compared to SEK 733 million last year. Last year's result included a reevaluation gain on electricity hedging of SEK 38 million. So if we exclude that, our underlying result improved by a couple of percent. We have seen positive effects from several cost initiatives in the period. Also, we've seen that the Restel acquisition keeps developing well both in terms of better cost efficiency but also improved market shares now that we have -- these acquired hotels are rebranded and integrated in the Scandic distribution. For the third quarter, we foresee stable market conditions and expect like-for-like revenue growth of between 1% and 2%. In addition, more rooms in operation are expected to contribute with approximately 2.5% to net sales in the coming quarter. Please turn to Page 3. Scandic has, over the past few years, grown rapidly, but both our margins and cash flow generation has been stagnant in the same years. This is something that we strive to improve in the coming years. We have therefore initiated several measures to strengthen Scandic's profitability, our cash flow and our market position even further. This is not a short-term program but rather something that we intend to work actively with over time. The first point on the list relates to portfolio management. Our portfolio has basically doubled in the past 5 years including 2 large acquisitions, and we are now doing a review of our hotel portfolio where we are taking a close look at Lahti. Today, we have some 15 hotels approximately that do not contribute financially, and some are even loss-making on the EBITDA level. It is likely that we will exit some of these hotels. We have also increased our focus on F&B. That includes our bars and restaurants and meetings. This is a significant part of our business, contributing roughly 1/3 of our revenues but with limited earnings contribution in total. In some of our outlets, we are looking at ways to adjust concepts and opening hours. And in some cases, we might even consider outsourcing the restaurant to an external operator in order to improve profitability. We recently did this in one of our wholesales in Copenhagen where we have signed a contract which will lead to positive results. The third point relates to our CapEx where we have implemented a number of initiatives to improve efficiency. We see potential to reduce our average spend per room and improve profitability both for our renovation and expansion CapEx. This is done through better planning, sourcing and execution combined with increased discipline in expansion investments so that we make sure that all new hotels really contribute to improved margins over time. We have also improved our efforts to increase our visibility in the markets and strengthen international distribution and sales both in our owned channels and with our partners. We see a clear trend that the international business is growing faster than the domestic in our markets, and we need to make sure that we take our share of that growth by securing that we are visible and bookable in all relevant channels.Finally, we have stepped up our digitalization rate in the company. We see significant potential in improving our internal efficiency and capture economies of scale in a better way as we still have a lot of manual processes in the company. Digitalization is also highly important for improving the customer experience in our industry.Please turn to Page 4. Here, you can see the market RevPAR growth on 12-month rolling basis. Demand growth has been quite firm in all our markets in the past quarter. And RevPAR development has, as you see, been fairly similar in Sweden, Norway and Finland with a couple of percentage there of growth. We are quite happy with the market development in Norway given the increased capacity that came to the market in Oslo in the beginning of the year, but that increase has been fully absorbed by good demand growth throughout the country. As expected, there was a drop in market RevPAR in Denmark due to increased capacity in Copenhagen. On Page 5, you can see the supply-demand balance for Sweden, our largest market. Demand has held up well in the market with around 3% growth while there has been relatively limited capacity growth of around 2%. Both if we look at the previous quarter and on a 12-month basis, RevPAR growth was marginally negative in the quarter but slightly positive on a 12-month basis with small changes both in occupancy and average room rate. So all in all, a relatively stable situation in Sweden.Please turn to Page 6 where you can see the market balance for Norway. Market RevPAR growth was actually positive in the second quarter despite almost 6% increase in hotel capacity mainly related to Oslo and a negative calendar effect in the quarter. So it is encouraging to see that strong demand throughout the country, especially in the Northern and Western part of the country, has fully absorbed the increase in available rooms in the market.On Page 7, you can see our pipeline at the end of the second quarter. The total number of rooms in operations was 52,562 by the end of June. In the quarter, we reopened 2 new hotels that has been closed for renovations. We opened Marski in Central Helsinki. That was opened as a new signature hotel. You can actually see that one in the front picture of this presentation. And we also opened Scandic Torget in Bergen in Norway. We are also adding 2 new hotels to the pipeline in Q2. We are taking over a Radisson Hotel in Central Stavanger already in October this year. And we also signed an agreement for a new hotel in Nørreport in the very Central Copenhagen that will open in late 2020.In total, we have net of 13 hotels with almost 5,200 rooms in our pipeline which corresponds to 10% of our portfolio. The gross pipeline consists of 16 hotels if we adjust for 3 planned exits. And we think this is a high-quality pipeline both when it comes to location of the hotels, the configuration as well as expected profitability. With that, I hand over to Jan that will take us through the financial part of the presentation.
Thank you, Jens. I will start on Page 9 where we'd go through our RevPAR development, our revenues per available room here. And you can see here, for the first half year, slightly positive, 0.7%; and in Q2 in isolation, slightly negative. However, remember here that we have a negative calendar effect in Q2, which means that underlying, we actually see that we have an improvement during Q2 in relation to the whole first 6 months. I would like to try some comments to each of the individual countries here because even if it's around 0, it looks stable. It's kind of a mixed picture between countries. In total then, we have more or less unchanged occupancy levels on group levels, around 63%, which you can see in the report, but as I've said, quite significant variations between the countries. Sweden, good demand, which means that the occupancy levels are slightly higher than last year. But here, we have struggled to increase prices, and that has also meant that RevPAR has been slightly negative throughout the first 6 months. Norway, actually not bad considering that there are 1,500 more rooms in the Greater Oslo area. Of course, Oslo has taken a RevPAR hit, but that has been well compensated by a good development in Western Norway and Northern Norway. Finland, very positive despite more capacity in the markets and good demand growth here. Occupancy level, more or less unchanged, but here, we have been able to lift prices here, lifting also RevPAR. Denmark, Copenhagen, we're, of course, seeing the pain now from the new openings in the market. And also remember last year, there were some big events in Q2 also distorting the comparison numbers. Obviously, our like-for-like portfolio here is taking a RevPAR hit, and that means that we will work -- need to work very consciously with the cost base in the Copenhagen operations. Germany, another quarter, another 6 months with positive RevPAR development. We are seeing that now for quite a long period, and we are on very high levels now in our German operations in terms of RevPAR. But I think remember then that underlying here we see an improvement, and that is mainly coming from the development in Finland and Norway and also Poland.Let's go into the financial statement, and I will take the liberty to present those excluding IFRS 16 effects initially because I think it makes more sense to understand our operations. But I will end the presentation, of course, explaining the IFRS 16 effects on our accounts. So Page 10. And here, I would like to start with the like-for-like development of our sales, and that obviously then corresponds to our RevPAR development. You can see here in this slide that the like-for-like sales development in Q2 was minus 1.6%. This is no drama as this is strongly influenced by the calendar effect. Looking into isolation May and June, we actually then have had an improvement, as you probably understand. So underlying, Q2 was stronger than Q1 when we adjust for these calendar effects. And this is despite the development we have seen in Oslo and Copenhagen where we, of course, record negative like-for-like sales growth there. And I think the conclusion here is also that the geographical spread we have in the group now means that we are much more resilient to these kind of effects where you have temporary imbalances in the market. The negative number we have in Other Europe, minus 3.9%, is fully attributable to the Copenhagen operations. And it's explained by more capacity in the market. And also, as I said earlier, that the Q2 numbers 2018 was rather strong in Denmark.On 6 full -- on the 6-month basis, the like-for-like was slightly positive then, 0.2%. In terms of portfolio growth, 2.5%, we expect that to continue as we will enjoy full effects now of the openings of Marski and Torget in Bergen for the third quarter. And we will also, as Jens said, have Falkoner coming into business during the third quarter and help that number. Obviously, the Hotel Norge has now been open for 12 months, which means that we will have comparables there in the third quarter. You can also see that we have had quite significant effects from the weak Swedish krona when translating the foreign currencies into SEK. Then on Page 11, I would like to then make some comments with regard to results and margins there by segment. And obviously, in bottom line there, you can see that we have reported lower results in margin both for Q2 as well as January-June. If we then exclude the effects from derivatives on electricity as well as currency effects, you can see that for the first 6 months, we have a slight improvement in terms of adjusted EBITDA. In terms of Sweden then first, we have a lower result, lower margin, and that is explained by the negative like-for-like sales but also the divestiture of Hasselbacken. Occupancy levels are more or less on the same levels as last year, but lower prices -- slightly lower prices has put pressure on margin. We do cost initiatives, but they have not yet been able to compensate for that. I would also like to underline that the exit of Hasselbacken has not been margin dilutive even though we lose sales and lose adjusted EBITDA then.Norway, surprisingly stable in Q2 given the negative calendar effect and the much more capacity we are having in Oslo; as we said earlier, West and Northern Norway, very positive development. The average prices has compensated for, in general, lower occupancy, which meant that -- and which has, of course, been positive. And Finland, positive RevPAR. Of course, there's cost synergies from Restel coming through, which means that we have had a quite consistent cost -- profit conversion in the operation. And you can see here that on 6-month basis, the adjusted EBITDA is up SEK 40 million, but that has obviously been a very -- more -- the important contributor to stabilizing the results during the first 6 months. In Other Europe, it's a mixed picture. The results and margins are up in the German and Polish operation. And during the first 6 months, we were able -- that was able to compensate for the development in Denmark, not to the full extent in Q2 in isolation then.Central costs, when adjusting for currency, also power supply had changed. You can see that we're slightly better than last year on that note. And then with regard to EPS, with IFRS implemented, the statements are more complicated here. And we have therefore now 3 different EPS rates which we present in the report to try to enhance, understanding our underlying performance. And the one which we have exclude the financial lease is absolutely necessary as IFRS have a significant impact on the net profit, around SEK 200 million on full year basis corresponding to SEK 2, SEK 2.5 per share, and that is not insignificant report, around 20% impact on yearly basis if we're looking into the performance 2018. What does this do? Well, it affects and it pushes profit into the future.On January-June excluding the financial leases, you can see that we have a quite strong development from SEK 1.25 last year up to SEK 3.03 this year. This is hugely impacted by items affecting comparability this year, the capital gain from Hasselbacken of SEK 181 million and last year the integration cost of Restel of around SEK 100 million. So if we exclude for that, you can see that we have a decline. But also that decline is partly explained by one-offs as we had the revaluation of tax losses -- or tax liabilities, I should say, last year of around SEK 40 million. So the true picture here is that we have a slight deterioration of EPS which is actually coming there from higher depreciations following the last year's high investment activity, M&A activity.Page -- and next page, it's about our improved cash flow. And you can see that we report quite strong cash flow here for the first 6 months. It's a mix of onetime effects and regular improvements. The improvement is around SEK 350 million. Lower investments explain SEK 100 million. Last year's restructuring costs plus transaction costs explains SEK 150 million. And then we have a regular improvement in working capital of around SEK 50 million. The remaining SEK 50 million is explained by net of the divestiture of Hasselbacken and the onetime Finnish tax payment which we did early this year. This results in a net debt of SEK 4.2 billion corresponding to 2.2x adjusted EBITDA. We believe that this is kind of a balanced financial strength, meaning that we are not overcapitalized, but we still have enough strength to take -- be able to take opportunities which might occur. And then finally, on Page 14, we put the IFRS 16 envelope to our numbers here. And you can see, as I said earlier here, not insignificant, around SEK 100 million on 6-month basis. This means that we are on track to get to around those SEK 200 million which we talked about in our guidance earlier this year. And this -- what it basically does is reducing our rents with SEK 1.6 billion, as you can see here, relabeling this as depreciation and the financing components, which is [ so far ] with some SEK 140 million, leading that to that pretax erosion of SEK 129 million. So that is basically it. And this was actually the last page in my presentation, so I think we then open up for questions.
Yes, operator, so now we are ready to take the questions.
[Operator Instructions] As there seem to be no questions, can I please pass it back to you for any closing comments at this stage?
Okay. In that case, we thank you very much for listening in and end the call here. Thank you very much.
This now concludes our call. Thank you all very much for attending. You can now disconnect your lines.