Strong Earnings Growth in First-Half 2007
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Strong Earnings Growth in First-Half 2007
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Category: Worldwide -
This is a press release selected by our editorial committee and published online for free on 2007-08-29
Dynamic Implementation of the Strategic Plan
A Promising 2007 Outlook
New €500 million share buyback program
Operating Profit Before Tax and Non Recurring Items up 34% to €379 million
• Net profit, Group share : €596 million compared to €241 million as of June 2006
• Full-year target for Operating Profit Before Tax and Non Recurring Items :
€870-890 million
The Board of Directors met on August 28, 2007 under the chairmanship of Serge Weinberg and approved the financial statements for the six months ended June 30, 2007.
(in € millions)
H1 2006
H1 2007
Change Reported
Consolidated Revenue rose by a reported 8.8% to €4,015 million in the first six months of 2007. At constant scope of consolidation and exchange rates, the like-for-like increase was 6.1%, reflecting the ongoing favorable environment in the Services and Hotel businesses.
EBITDAR amounted to €1,095 million, up 10.2% (L/L) compared with first-half 2006. The Hotel division’s new business model, the upturn in the hotel cycle in Europe – leading to a sharper rise in average room rates – and sustained activity levels in the Services business drove a 1.0-point improvement in EBITDAR margin to 27.3% of revenue in first-half 2007. EBITDAR margin in the Hotel business increased by a like-for-like 0.7 points in the Upscale and Midscale segment, 1.5 points in European Economy Hotels and 1.6 points in US Economy Hotels. The Services business reported an EBITDAR margin of 41.9% for the period, a 2.4-point like-for-like increase that attested to the business’ robust performance in its markets.
Operating Profit Before Tax and Non Recurring Items was 31.5%, higher like-for-like, at €379 million in first-half 2007.
Net profit, Group share amounted to €596 million, up 147.6% over the year-earlier period. The total includes €311 million in capital gains on property disposals mainly in the United Kingdom, in Germany and the Netherlands. It also includes the €204 million gain on the sale of Go Voyages and the €173 million impairment charge recorded on Red Roof Inns, pending disposal of this business, to be completed in the second half 2007.
Earnings per share rose by 150.9% to €2.66 from €1.06 in first-half 2006, based on the weighted average 224 million shares outstanding during the period. Earnings per share before non recurring items, net of tax, came to €1.15, up 32.2% compared to first-half 2006.
Net debt amounted to €928 million at June 30, 2007, after taking into account €676 million in development expenditure compared to €164 million in first-half 2006, of which €211 million for the Kadéos acquisition and €186 million for the acquisition of control of Dorint, and the €953 million proceeds from asset disposals, corresponding mainly to the sale of Go Voyages under the non-strategic assets disposal policy (€ 280 million) and property disposals under the asset management strategy (€ 560 million). Dividends paid in first-half 2007 amounted to €678 million (versus €267 million in the year-earlier period), including a special dividend of €1.50 per share for a total payout of €336 million. In addition, equity was reduced by €398 million during the period through the share buyback program (representing €492 million at June 30, 2007). The €700 million program had been completed as of the end of August.
The main Financial Ratios improved significantly, reflecting the Group’s robust financial position. Gearing stood at 25.0% at June 30, 2007, the ratio of adjusted funds from operations to adjusted net debt1came to 23.6%, up 1.4 points compared to the end of December 2006, while the Return On Capital Employed2 continued to improve, rising to 12.8% from 11.0% at June 30, 2006.
Change
L/L(1)
Revenue
3,690
4,015
+8.8%
+6.1%
EBITDAR
969
1,095
+13.0%
+10.2%
EBITDAR margin
26.3%
27.3%
+1.0 pts
+1.0 pts
Operating Profit Before Tax
and Non Recurring Items
282
379
+34.4%
+31.5%
Net profit, Group share
241
596
+147.6%
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