Scandic’s year-end report 2019 – Continued improvement in adjusted EBITDA
FOURTH quarter in summary
- Net sales rose by 5.1% to 4,831 MSEK (4,595) mainly due to more rooms in operation and strong sales growth in Finland.
- Organic sales growth totaled 4.4%, of which net sales for comparable units increased 2.2%.
- Adjusted EBITDA improved and amounted to 504 MSEK (487) thanks to strong results in Finland and Norway. Adjusted for the effect of finance leases and items affecting comparability, earnings per share totaled 1.83 SEK (1.84).
- Agreement for a new 350-room hotel in Helsinki and a 160-room hotel in Örebro, Sweden.
- During the quarter, Scandic exited the Finnish hotels Scandic Lappeenranta and Scandic Seurahuone which together had 213 rooms.
The YEAR in summary
- Net sales rose by 5.2% to 18,945 MSEK (18,007) and organic growth was 3.9%. For comparable units, net sales went up 1.5%.
- The free cash flow improved during the period and amounted to 777 MSEK (263), partly due to higher adjusted EBITDA, improvements in working capital and lower levels of capex.
- Adjusted for the effects of finance leases and items affecting comparability, earnings per share amounted to 7.49 SEK (7.87).
- For 2019, the Board of Directors proposes that the AGM resolve on a dividend of 3.70 SEK (3.50) per share.
EVENTS AFTER THE REPORTING DATE
- Launch of Scandic GO, a new brand in the growing economy segment, that increases Scandic’s growth potential.
A satisfactory end to the year
During the fourth quarter, organic sales growth was just over 4% and adjusted EBITDA rose to MSEK 504 (487) compared with last year’s relatively strong fourth quarter. Adjusted EBITDA for the full year grew to 2,046 MSEK, the highest level ever for Scandic, while we also strengthened the cash flow and financial position.
RevPAR rose during the quarter mainly as a result of the continued strong Finnish market where the Finnish EU Presidency had a positive impact on demand. It was also gratifying that higher demand in Norway compensated for the capacity increase in Oslo during the first half of 2019.
Strong growth in demand
The demand for hotel experiences is growing in our markets. We estimate that the number of sold rooms in the Nordic countries has increased by around 3 to 4% per year since 2010, and development in 2019 was fully in line with this trend. Among other things, growth is being driven by increased tourism and greater numbers of international visitors, not least in the big cities. We are following the development of the new coronavirus and subsequent travel restrictions from China closely, but we expect this to have a limited effect on Scandic.
With a pipeline corresponding to 11% of our existing portfolio, we have excellent opportunities for continued profitable growth through new hotels in the coming years, especially between 2021 and 2022.
Scandic GO to increase long-term growth potential
We are very proud to launch Scandic GO, a new brand in the growing economy segment that increases Scandics growth potential. With a high share of room revenue, Scandic GO is expected to have higher margins and lower investments per room compared to our existing portfolio.
Continued work in five focus areas
We are continuing to maintain the pace of our work in our main focus areas to strengthen profitability and cash flow. Scandic has a clear ambition to improve profitability in its restaurant and conference operations and it may be necessary to exit additional hotels that do not show potential for satisfactory profitability over time.
To gain more control over our portfolio management and investments, we recently made organizational changes that involve coordinating expertise in areas from leasing to concept development and investment. I am convinced that this will strengthen Scandic’s ability to develop and improve the hotel portfolio.
Stable market expected in Q1
We expect demand to continue to grow in the first quarter of 2020 and a 1-3% increase in sales for comparable units. More rooms in operation will only have a marginal impact on net revenues in the quarter.
President & CEO
This information is information that Scandic Hotels Group AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 07.30 CET on February 18, 2020.
Report presentation February 18, 2020 at 08.50 CET
Scandic Hotels Group is pleased to extend an invitation to the webcast presentation of the company’s interim report for the fourth quarter 2019 on February 18 at 08:50 CET. The report will be published at 07:30 CET on the same day.
Scandic will hold a Capital Markets Day in Stockholm on February 18 that will begin with a presentation of its year-end report for 2019 by President & CEO Jens Mathiesen and CFO Jan Johansson.
The presentation will be streamed live on Scandic’s website at scandichotelsgroup.com and there will also be opportunities to post questions. The webcast will also be available afterwards on Scandic’s site.
For more information, please contact:
Henrik Vikström, Director Investor Relations, Scandic Hotels Group
Email : email@example.com
Phone: +46 709 52 80 06
About Scandic Hotels Group
Scandic is the largest hotel company in the Nordic countries with more than 280 hotels, in operation and under development, in more than 130 destinations. The company is the leader when it comes to integrating sustainability in all operations and its award-winning Design for All concept ensures that Scandic hotels are accessible to everyone. Well loved by guests and employees, the Scandic Friends loyalty program is the largest in the Nordic hotel industry and the company is one of the most attractive employers in the region. Scandic Hotels is listed on Nasdaq Stockholm. www.scandichotelsgroup.com