Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Scandic Hotels Group AB (FRA:10H, Financial) delivered a good quarter despite a 1.5% reduction in available rooms compared to the same period last year.
- The company launched a new loyalty program and announced a strategic partnership with Scandinavian Airlines, enhancing commercial capabilities.
- Scandic Hotels Group AB continues to expand its portfolio with new hotel openings in Sweden and Germany, including a new hotel in Stuttgart.
- The company has announced new financial targets for 2025 to 2027, including initiatives for capital returns to shareholders.
- Scandic Hotels Group AB is in a strong financial position, with net debt reduced to below 1 times adjusted EBITDA, and plans to return at least SEK1.2 billion to shareholders between 2024 and 2026.
Negative Points
- The performance was impacted by a weak summer in Gothenburg and a challenging market in Finland.
- The Finnish market remains uncertain due to economic weakness and the closed border with Russia.
- Adjusted EBITA was slightly below the result in the third quarter last year, with a margin decrease from 18.1% to 17.7%.
- The company's RevPar growth was somewhat lower than the market, mainly due to lower occupancy in September.
- Currency effects and phased-out rent rebates in Germany negatively impacted financial results.
Q & A Highlights
Q: Can you elaborate on why RevPar was weaker than the market in Q3, particularly in Sweden, and clarify if the flat RevPar guidance for Q4 is in constant currency or actual?
A: Jens Mathiesen, CEO: The weaker RevPar was partly due to a lack of events in Gothenburg compared to last year, which significantly impacted room rates. However, Stockholm performed well. The flat RevPar guidance for Q4 is in constant currency, indicating stability in occupancy and pricing levels.
Q: Regarding the margin target of 11%, is this a floor rather than a cycle average, and what gives you confidence in maintaining this level?
A: Jens Mathiesen, CEO: We are confident in setting 11% as a floor due to our consistent performance above this level. This target reflects our belief in the stability of the industry and our ability to achieve higher margins if possible.
Q: How do you plan to achieve your growth targets, particularly in terms of room growth and RevPar?
A: Jens Mathiesen, CEO: We aim to drive growth through commercial initiatives, new room additions, and leveraging partnerships like the one with SAS. We expect these efforts to help us grow RevPar faster than the market.
Q: With the current net cash position, do you plan to maintain this level, or will you consider increasing leverage for growth?
A: Par Christiansen, CFO: We plan to operate within a framework of a maximum of 1x net debt to EBITDA, providing flexibility for growth and potential acquisitions. We aim to maintain a strong balance sheet while pursuing expansion opportunities.
Q: Can you provide insights into the event schedule for next year compared to this year?
A: Jens Mathiesen, CEO: Next year looks promising with more events, especially in Gothenburg, which should improve performance compared to this year's one-off situation. Stockholm also continues to perform well with a strong event lineup.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
