- Prepaid Services: firm resistance of revenue (up 5.7%
like-for-like[1]) and margin (up 0.4 points like-for-like) -
Hotels: - Economy hotels outside the US: resilient revenue (down
7.3% like-for-like) and margin (down 2.3 points like-for-like), led
by a solid performance in France - Upscale and Midscale Hotels and
Economy Hotels in the United States: two segments severely impacted
by the crisis - Operating profit before tax and non-recurring
items: EUR182 million (down 44.5% like-for-like) - Robust balance
sheet: Funds from operations/adjusted net debt ratio of 21.5% -
Cost-cutting plans already 50% completed in the first half:
owned/leased hotels operating costs reduced by EUR72 million and
support costs by EUR37 million Operating costs reduction plan in
the owned/leased hotels raised to EUR150 million from EUR120
million *** - Full-year target for operating profit before tax and
non-recurring items: EUR400 million to EUR450 million *** - Given
the depth and speed of the changes ahead, the transformation and
development of the two core businesses will be stepped up. As part
of this process, the Board of Directors has approved Chairman and
CEO Gilles Pelisson's recommendation to conduct a review of the
potential benefits of demerging the two businesses into two
independent companies, each with their own strategy and resources
for growth. 2009 first-half financial results (in EUR millions)
First-Half First-Half % change % change 2008 2009 as like-for
Adjusted(1) reported -like(2) Revenue 3,758 3,410 -9.3% -8.1%
EBITDAR(3) 1,088 924 -15.1% -15.0% EBITDAR margin 29.0% 27.1%
-1.9pt -2.2pts EBIT 425 242 -43.0% -39.0% Operating profit before
393 182 -53.7% -44.5% tax and non-recurring items Operating profit
before 264 114 -56.8% - non-recurring items, net of tax Net
profit/(loss), Group 310 (150) n/a - share ROCE(4) 14.5% 12.1%
-2.4pts - (1) As a result of applying IFRIC 13 from January 1,
2009, the Group reviewed its accounting policy for recognizing
award credits under customer loyalty programs. The new accounting
method has been applied on a retrospective basis, with pro forma
data provided for the six months ended June 30, 2008. (2) At
constant scope of consolidation and exchange rates (3) Earnings
before interest, taxes, depreciation, amortization and rental
expense. (4) ROCE: Corresponding to EBITDA expressed as a
percentage of fixed assets at cost plus working capital. In an
extremely weak economic environment, consolidated revenue for the
first half of 2009 totalled EUR3,410 million, down 9.3% on a
reported basis and 8.1% like-for-like compared with first-half
2008. PREPAID SERVICES Revenue from the Prepaid Services business
rose by 5.7% like-for-like in the first half, overcoming the
adverse impact of i) sharply higher unemployment rates, which are
affecting corporate customers, particularly in Europe, and ii)
lower interest rates, which are reducing interest income recognized
in revenue. Operating revenue (i.e. excluding interest income) rose
by 6.8% over the period, compared with a 1.2% decline in interest
income. Revenue growth was led by stepped-up marketing and sales
initiatives, which drove the development of new products and the
penetration of new markets, in particular with the launch of travel
agency cards in the United Kingdom and holiday vouchers in Romania.
Other initiatives targeted France's prefunded Universal Employment
Service Vouchers (CESU Social) program, which is designed to
support people most hurt by the recession. EBIDTAR margin stood at
43.2%, up 0.8 points on a reported basis and 0.4 points
like-for-like. The margin improvement reflected the 1.1-point
like-for-like gain in the margin on operating revenue (51.3%
flow-through ratio[2] excluding interest income). The decline in
interest income reduced total margin for the period by 0.7 points
like-for-like. In Europe, EBITDAR margin narrowed by 1.4 points
like-for-like, impacted by rising jobless rates in the region and
the steep decline in interest rates. In Latin America, it improved
by 2.0 points like-for-like, despite the decelerated growth in
interest income following the steady drop in interest rates since
May 2009. HOTELS In a severely depressed business environment,
Hotels revenue fell 11.4% like-for-like in the first half. Although
the Upscale and Midscale Hotels and US Economy Hotels segments have
been hard hit, with revenue contracting by 13.3% and 12.8%
respectively over the period, the Economy Hotels outside the US
segment demonstrated firmer resistance, holding revenue weakness to
7.3%. The Group's ability to limit the revenue decline compared
with the competition was supported by a certain number of marketing
and sales initiatives deployed as part of the battle for revenue
process. The battle for revenue is also being supported by the
success of the A|Club loyalty program, whose more than 3 million
cardholders account for 10% of retail customer revenue, just one
year after launch. In addition, the first half already saw
operating costs in the owned/leased hotels reduced by EUR72
million, out of the announced EUR120-million target for the year.
Accor confirms its objective of opening 30,000 new rooms in 2009.
12,100 have already been opened in the first six months of the
year, of which 78% under low capital-intensive ownership structures
(management contracts, franchise agreements and variable rent
leases), 58% in the Economy and Budget segments, 35% in Europe and
35% in Asia. Pursuing this expansion dynamic remains a priority,
with 103,000 rooms in the pipeline. - Upscale and Midscale Hotels
hard hit by recession In the Upscale and Midscale segment, revenue
declined by 11.9% as reported in the first half, and by 13.3%
like-for-like. EBITDAR margin came to 23.6% of revenue, down 4.1
points as reported and like-for-like. The response ratio, excluding
support costs, stood at 33.9% and at 45.5% after accounting for the
EUR25-million reduction in support costs driven by the cost-cutting
plans. - Economy hotels outside the United States: resilient
revenue and margins, led by a solid performance in France In a
lackluster economic environment, Economy Hotels proved to be more
resilient than the other segments, with revenue retreating by 7.6%
as reported during the first half and by 7.3% like-for-like. At
34.1%, EBITDAR margin narrowed by 1.9 points as reported and 2.3
points like-for-like. The firm resistance was primarily due to
operations in France, where margin was down just 0.4-points
like-for-like, to 30.5% on reported basis. The response ratio,
including support costs, was 34.9%. - Economy Hotels US: deeply
impacted by two years in a row of recession Motel 6 revenue
contracted by 2.0% on a reported basis in the first half and by
12.8% like-for-like. Although still affected by the severely
weakened US economy, Motel 6 is still faring better than the
competitors, with RevPAR two points higher than the peer group's.
In the United States, the Economy segment is generally
outperforming the Upscale and Midscale segment by around 10 points
of RevPAR. EBITDAR margin amounted to 30.8%, down 7.1 points as
reported and 5.7 points like-for-like, while the response ratio was
18.7%, in a country that has been in recession for more than two
years. CONSOLIDATED RESULTS Consolidated EBITDAR[3] amounted to
EUR924 million in the first half of 2009, down 15.0% like-for-like
compared with the year-earlier period and 15.1% as reported.
EBITDAR for the period reflected the support-cost savings already
achieved in the first half, which totaled EUR37 million out of the
full-year target of EUR80 million. It represented 27.1% of
consolidated revenue, compared with 29.0% in first-half 2008. The
firm resistance of the Group's two main core businesses, Prepaid
Services and Economy Hotels outside the US, helped to limit the
decline in margin to 1.9 points as reported and 2.2 points
like-for-like. EBIT fell by 43.0% to EUR242 million as reported and
by 39.0% like-for-like. The fact that some rental expense is
indexed to revenue helped to save around EUR15 million over the
period. Operating profit before tax and non-recurring items stood
at EUR182 million for the period, down 44.5% like-for-like and
53.7% as reported. Operating profit before non-recurring items, net
of tax amounted to EUR114 million, compared with EUR264 million in
first-half 2008. The net loss, Group share, which came to EUR150
million, was impacted by EUR194 million in asset impairment losses
(of which EUR118 million on Motel 6 goodwill). These losses
reflected the decline in the assets' balance sheet value and did
not have any cash impact. In addition, the net loss includes EUR53
million in restructuring costs, primarily related to Group
reorganization programs. In first-half 2008, the Group reported a
net profit, Group share of EUR310 million, lifted by EUR130 million
in capital gains on asset disposals. Funds from operations declined
to EUR378 million from EUR487 million in first-half 2008. Net debt
stood at EUR1,961 million at June 30, 2009, after EUR193 million in
expansion expenditure in the Hotels and Prepaid Services
businesses, EUR77 million in asset disposals and the payment of
EUR201 million in dividends. Net debt also includes two
non-recurring items: the acquisition of an additional 15% interest
in Groupe Lucien Barriere for EUR269 million and the payment of
EUR242 million to the French State in settlement of tax assessments
on Compagnie Internationale des Wagons Lits (CIWLT). Note that the
Group has contested these assessments before the court. The main
financial ratios attest to the solidity of Accor's balance sheet at
June 30, 2009. Backed by the two bond issues totaling EUR1.2
billion carried out in the first half, the Group has EUR1.8 billion
in unused, confirmed lines of credit at June 30, 2009. No
significant amount of debt has to be repaid over the next three
years. The ratio of funds from operations to adjusted net debt[4]
stood at 21.5% at June 30, 2009, compared with 24.2% at June 30,
2008 and 25.8% at December 31, 2008. Return on capital employed
declined by 2.4 points during the first half, to 12.1% at
period-end from 14.5% at June 30, 2008. Outlook for 2009 - July
business trends Prepaid Services: growth in revenue despite the
faster decline in interest income Revenue was up 0.6% like-for-like
and year-on-year in July, reflecting a 4.4% increase in operating
revenue and a 21.9% drop in interest income recognized in revenue.
Latin America is faring better than Europe, as stronger operating
revenue growth (up 6.3% versus 3.3% in Europe) offset a steeper
decline in interest income (down 26.5% versus 18.8% in Europe). The
decline in interest income that emerged in May 2009 is gaining
momentum as the third quarter begins. Hotels: improving trends in
July, buoyed by the increase in the proportion of leisure travelers
during the summer In Upscale and Midscale Hotels in Europe, July
RevPAR was down 12.7% like-for-like, compared with a 19.2% decline
in the second quarter. In the Economy Hotels segment in Europe,
July RevPAR was down 8.5% like-for-like, compared with a 9.7%
decline in the second quarter. In the US Economy Hotels business,
July RevPAR was down 15.2% for the month, versus a 15.7% decline in
the second quarter. - 2009 earnings guidance In the absence of any
visibility in the economic environment, the target for operating
profit before tax and non-recurring items has been based on the
following assumptions: In Prepaid Services: - A more than 25%
decline in interest income in the second half, causing
like-for-like revenue to show a slight gain for the year. - An
operating margin of more than 40% for the year. In the Hotels
business: - No major improvement in business expected in the second
half. - The plan to reduce operating costs in the owned/leased
hotels will be stepped up to EUR150 million from EUR120 million, to
ensure that the response rate holds steady at 35%. Consolidated
earnings: - Support costs will be reduced by EUR80 million over the
year. As a result he target for operating profit before tax and
non-recurring items has been set at between EUR400 million and
EUR450 million. Business strategy Give the depth and speed of the
changes ahead, the transformation and development of the two core
businesses will be stepped up. As part of this process, the Board
of Directors has approved Chairman and CEO Gilles Pelisson's
recommendation to conduct a review of the potential benefits of
demerging the two businesses into two independent companies, each
with their own strategy and resources for growth. Upcoming events -
October 15: Quarterly Report (third-quarter revenue) Accor, a major
global group and the European leader in hotels, as well as the
global leader in services to corporate clients and public
institutions, operates in nearly 100 countries with 150,000
employees. It offers to its clients over 40 years of expertise in
two core businesses: - Hotels, with the Sofitel, Pullman, MGallery,
Novotel, Mercure, Suitehotel, Ibis, all seasons, Etap Hotel,
Formule 1 and Motel 6 brands, representing 4,000 hotels and nearly
500,000 rooms in 90 countries, as well as strategically related
activities, such as Lenotre. - Services, with 32 million people in
40 countries benefiting from Accor Services products in employee
and constituent benefits, rewards and incentives, and expense
management. --------------------------------- [1] At constant scope
of consolidation and exchange rates [2] The ratio of the change in
like-for-like EBITDAR/change in like-for-like revenue is known as
the flow-through ratio when like-for-like revenue goes up and as
the response ratio when like-for-like revenue goes down (in which
case it is equal to 1 - [change in like-for-like EBITDAR/change in
like-for-like revenue]). [3] EBITDAR: Earnings before interest,
taxes, depreciation, amortization and rental expense. [4] The ratio
of funds from operations before non-recurring items to adjusted net
debt is calculated according to a method used by the main rating
agencies, with net debt adjusted for the 8% discounting of future
minimum lease payments and funds from operations adjusted for
interest expense on these payments. Funds from operations before
non-recurring items corresponds to cash flow from operating
activities before non-recurring items and changes in working
capital requirement. --------------------------------- DATASOURCE:
Accor CONTACT: MEDIA CONTACTS: Armelle Volkringer, Vice President,
Corporate Communication and External Relations, Tel. :
+33-1-45-38-87-52; Alain Delrieu, Tel. : +33-1-45-38-84-85.
INVESTOR RELATIONS CONTACTS: Eliane Rouyer-Chevalier, Senior Vice
President, Investor Relations and Financial Communications Tel. :
+33-1-45-38-86-26; Solene Zammito, Investor Relations, Tel. :
+33-1-45-38-86-33.
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