Scandic’s interim report Q1 2023– Strong first quarter
First quarter in summary, January 1 – March 31, 2023
• Net sales rose by 65.6 percent to 4,526 million SEK (2,733).
• Average occupancy rate increased to 53.5 percent (39.1).
• Average revenue per available room (RevPAR) went up to 626 SEK (395).
• Operating profit amounted to 199 million SEK (-279).
• Adjusted EBITDA1) was 170 million SEK (-237).
• Earnings per share totaled -1.63 SEK (-3.35). Excluding IFRS 16, earnings per share equaled -0.88 SEK (-2.73).
• Free cash flow was -356 million SEK (-997).
• Interest-bearing net debt/adjusted EBITDA amounted to 1.2x including convertible loan.
• On February 15, 2023, Scandic signed an agreement for external financing with total credit facilities of 3,450 million SEK until December 31, 2025. In connection with the extension, interest terms and covenants were also adjusted.
• Scandic opened one hotel, the 505-room Scandic Frankfurt Hafenpark in Germany.
1) Earnings before pre-opening costs, items affecting comparability, interest, taxes, depreciation and amortization, adjusted for the effects of IFRS 16.
“After a great first quarter and with strengthened finances, we’re picking up the pace at Scandic.”
Strong first quarter
We started the new year with many questions about how Scandic would be impacted by the uncertainty in the world around us. After the first quarter, we can say that guests are choosing to stay at our hotels at positive price levels, and we have delivered a strong first quarter. Momentum is very high in the company. I’m satisfied by how we’ve met market demand commercially and how we’re achieving these results with a strong focus on pricing and operational efficiency.
With the record number of hotels opened with urban locations in big cities last year, we’re well positioned with our strong offering. In March, we opened our sixth hotel in the German market, Scandic Frankfurt Hafenpark, with a focus on developing meetings and events in the city. At the end of the first quarter, Scandic had 56,000 hotel rooms in operation, an increase of just over 2,000 rooms or close to 4 percent compared with the corresponding quarter last year, in a market where supply also grew. The number of rooms sold increased, although this greater supply had a negative impact on occupancy.
In all our markets, demand was good from corporate customers and leisure travelers alike. Demand for meetings was also historically high for a first quarter. Domestic travel in our markets continued to be strong while travel between the Nordic countries and Europe remained at high levels. Intercontinental travel continued to recover mainly driven by travelers from the US and China. By all accounts, 2023 seems set to be a solid year for the travel industry, which is extremely gratifying.
Compared with the first quarter 2022, Scandic’s net sales grew 66 percent to 4,526 million SEK and our adjusted operating profit was 170 million SEK, which is 407 million SEK higher than in 2022 and slightly higher than in 2019.
The average occupancy rate was 53.5 percent compared with 39.1 and 58.9 percent for the corresponding periods in 2022 and 2019 respectively. Average room prices increased to 1,169 SEK compared with 1,011 SEK and 1,018 SEK respectively for the same periods in 2022 and 2019. Consequently, RevPAR for the first quarter was 626 SEK compared with 395 SEK in 2022 and 599 SEK in 2019.
Cash flow was stronger than expected during the quarter with positive development in underlying working capital excluding the repayment of rental debts. Including the convertible loan, Scandic’s net debt was still significantly lower than at the end of the first quarter 2019.
After a great first quarter and with strengthened finances, we’re picking up the pace at Scandic.
Leisure travel is driving development in the economy segment, which is the fastest-growing segment in the hotel industry. And it is in this area that we’re now strengthening our offering by launching Scandic Go. We aim to play a leading role in the economy segment in our markets. There is great potential to develop Scandic Go since the economy segment represents only about 5 percent of the hotel market in the Nordic countries compared with approximately 15 percent in the rest of Europe. Our first Scandic Go hotel will open in the beginning of September on Upplandsgatan in Stockholm.
In addition to being a strategic investment, Scandic Go shows our clear objective to boost Scandic’s growth rate and add more lease agreements to our pipeline.
Based on current bookings, we expect good demand in hotel stays this spring and summer in line with bookings during the same period last year, and this applies to business and leisure travelers alike. For the second quarter, we anticipate occupancy rates aligned with the corresponding period last year – at higher average room rates. We also expect a good quarter for meetings and continued high efficiency in our operations.
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 April 27, 2023.
For more information, please contact:
Rasmus Blomqvist, Director Investor Relations, Scandic Hotels Group
Telephone: +46 702 335 367
Åsa Wirén, CFO, Scandic Hotels Group
Telephone: +46 706 444 533
Scandic’s President & CEO Jens Mathiesen will present the report together with CFO Åsa Wirén in a webcast and telephone conference at 09.00 CEST, today.
Time: Thursday, April 27, 2023, at 09.00 CEST.
Location: Webcast and telephone conference.
Telephone numbers: Dial-in number to the telephone conference will be received by registering on the link below. After the registration you will be provided with phone numbers and a conference ID to access the conference.
Registration: Click here to register
Please register and call in five minutes before the start. The interim report, presentation and webcast will be made available on www.scandichotelsgroup.com.
Please join us to listen in and ask questions.
About Scandic Hotels Group
Scandic is the largest hotel company in the Nordic countries with a network of about 280 hotels with 58,000 rooms 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 is listed on Nasdaq Stockholm. www.scandichotelsgroup.com