A three-year period of consolidation and financial discipline comes to an end with the company in even better shape than the industry average to face the uncertainties of the economic cycle.
• The hotel company has met market expectations for 22 consecutive quarters and is one of only three European hotel companies with an investment grade credit rating.
• The excellent results of recent years have allowed the company to build a solid base on which to found the qualitative change prepared up to 2010.
Sol Meliá has announced company results for the financial year 2007 including a net profit of 161.9 million euros. Revenues increased by 7.2% to 1,347 million euros and EBITDA, although affected negatively by the devaluation of the dollar, rose to 349 million euros, a 7.1% increase over 2006.
With these results, the company ends an historical three year process, during which it has achieved the objectives of its 2004-2007 Strategic Plan; a reduction in company debt, an increased contribution from the Vacation Club business which now stands at 10% of group EBITDA, favourable asset disposal and acquisition policies, and an annual average increase of 5% in revenues per available room (RevPar).
With the announcement of these results, Sol Meliá has now met market expectations for 22 consecutive quarters, in spite of the fact that the volatility affecting stock markets has meant that this has not always been reflected in the strength of the company’s share value.
The Strategic Plan 2004- 2007: the consolidation
In 2007 the company finalised the implementation of its previous Strategic Plan, with important achievements in both financial and business areas, achieving a reduction in debt levels of 350 million euros and an average increase in revenues per available room (RevPAR) of 5.3%.
EBITDA margin increased by 280 base points meaning that there was a spectacular growth in ROCE of 490 base points over the period.
These favourable results are basically due to the performance of the Sol Meliá Vacation Club which contributed 10% of EBITDA for the period, and achievement of objectives with regard to asset rotation, particularly with regard to the favourable difference between the multiples of disposals and the acquisition of strategic assets (19.5 x against 8.5 x):
