Successfully reported this slideshow.

Accor Hospitality financial analysis

3,348 views

Published on

A financial analysis of Accor Hospitality Group. Key figures, ongoing projects, financial analysis and suggestions.

Published in: Education

Accor Hospitality financial analysis

  1. 1. Summary • Company Profile • Milestone • Vision and Mission • Key Figures • Ongoing Projects • Financial Analysis •Income Statement • Balance Sheet • Ratios • Conclusions and Suggestions
  2. 2. What: • World’s leading hotel operator • Market leader in Europe Where: • 92 countries Who: • Sofitel, Pullman, MGallery, Grand Mercure, Novotel, Suite Novotel, Mercure, Adagio, ibis, ibis Styles, ibis budget and hotelF1 From luxury to economy
  3. 3. Milestones 1967 SIEH (Société d’Investissment et d’Exploitation Hotelier) 70’s-80’s Hotel operations in Brazil, Mexico, USA 90’s World’s leading hotel group Market leader in the Asia-Pacific region 2000’s • Launch of accorhotels.com • Chinese hotel market • New property managment strategy • Governance system from a Supervisory Board and Management Board to a Board of Directors
  4. 4. Vision and mission • Innovation is our trademark • Performance is the key to our continued success • Respect is basis of all our relationships • Trust is the foundation of our management
  5. 5. Ongoing Projects Accor is currently implementing 4 major projects aiming to improve results 1) IBIS Megabrand 2) TARS System (booking platform) 3) Expansion • 38.085 new rooms in 2012 • 70% in Emerging Markets • 50% are IBIS • 85% asset-light 4) Asset Management Program
  6. 6. Asset management strategy • Management of owned hotels • 200 hotels sold - € 1.3 billion positive impact on consolidated adjusted net debt as of 2016. • Management of leased hotels: 600 hotels • Will improve consolidated operating margin.
  7. 7. Accor income statement 2010-2012 amounts in € millions CONSOLIDATED INCOME STATEMENT ACCOR 2010 2011 2012 1 Total Revenues 5,948 6,100 5,649 2 Operating expenses* -4,134 -4,177 -3,861 3 Contribution Margin (1-2) 1,814 1,923 1,788 4 Rental Expenses -934 -995 -938 5 EBITDA (3-4) 880 928 850 6 Amortization and depreciation -434 -398 -324 7 EBIT (5-6) 446 530 526 8 Total net financial expenses -112 -92 -58 9 Income before tax and extraordinary items (7-8) 334 438 468 10 +/- Non recurring items -346 -112 -229 11 Income before tax (9-10) -12 326 239 12 Income tax expenses -392 -274 -143 13 Net Income for continuing operations (11-12) -404 52 95 14 Profit or loss for descontinued operations 4,014 -2 -679 15 Net Income (13-14) 3,610 50 -584 * Operating expenses include variable and fixed costs
  8. 8. Revenue Trends 5.948 6.100 5.649 5.000 5.500 6.000 6.500 2010 2011 2012 in€million Accor Total Revenues 2010 2011 2012 Revenues +7.1 +5.2 +2.7% •IS shows relatively stable revenues over the period 2010 to 2012 •Excluding the effects of disposals, asset-right strategy and currency exchange the Revenues have increased by 15% over the period •Expansion: •2010 - €76 mi (1.4% ) – opening of 214 hotels / 25.000 rooms •2011 - €108 mi (1.8% ) – opening of 318 hotels / 38.700 rooms •2012 - € 154 mi (2.8% ) - 266 hotels / 38.085 rooms
  9. 9. Cost structure - 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 4.500 2010 2011 2012 Accor Cost Structure Other operating expenses Taxes, insurance and service charges Energy, maintanance and repairs Employees benefits expense Cost of Goods Sold •Salaries are the main component of the cost structure •Structure has not changed over the period •Energy, maintenance and repairs are low mainly due to the very efficient Accor policy on sustainability (Planet 21)
  10. 10. Role of operating activity on Net Income •Operating expenses take up to about 85% of the revenues • Impact of operating expenses on Net Profit is very high, in line with the industry •Accor doing a great job in managing these costs •25% franchising •Cutting energy costs (Planet 21) •Efficient management - 1.000 2.000 3.000 4.000 5.000 6.000 7.000 2010 2011 2012 Impact of operating expenses on Net Income Revenues allocated to other costs Revenues allocated to cover operating expenses
  11. 11. EBIT Trend 0 200 400 600 800 1.000 2010 2011 2012 in€million Accor EBIT •EBIT increased by 18% over the period 2010 to 2012, mainly in 2011 due to increase in revenues and decrease in amortization and depreciation •Consequences of the asset-right structure
  12. 12. Role of non-operating activities on Net Income -1.000 0 1.000 2.000 3.000 4.000 5.000 6.000 7.000 8.000 2010 2011 2012 Accor Revenues distribution Net Income Net Income for continuing operations Income before tax Income before tax and extraordinary items EBIT EBITDA Contribution Margin •Non-operating activities are not relevant for the Net Income •In 2010, an extraordinary fact added € 4 billion to Net Income. This was the result of the demerge of Edenred (Prepaid Services).
  13. 13. Net Income Trend -600 -400 -200 0 200 2010 2011 2012 in€million Accor Net Income (excluding discontinued business) -1.000 0 1.000 2.000 3.000 4.000 2010 2011 2012 in€million Accor Net Income •Looking at the real Net Income (excluding the descontinued business), there was an improvement •Increase in revenues •Decrease in operating expenses •Decrease in depreciation and amortization
  14. 14. Accor Balance Sheet 2010 - 2012 amounts in € millions CONSOLIDATED BALANCE SHEET ACCOR 2010 2011 2012 1a Quick assets 1,143 1,370 1,878 1b Inventory 41 41 47 1c Current assets 1,367 1,312 1,151 1 Total Current Assets 2,551 2,723 3,076 2 Tangible fixed assets 3,682 3,257 2,592 3 Intangible fixed assets 1,152 1,085 1,104 4 Financial fixed assets 480 549 632 Assets held for sale 813 386 156 5 Total fixed assets 6,127 5,277 4,484 6 Total net assets 8,678 8,000 7,560 7 Current Liabilities (financial and non-financial) 2,336 2,293 2,736 8 Long-term Liabilities (financial and non-financial) 2,393 1,939 1,835 9 Total liabilities 4,729 4,232 4,571 10 Shareholders' equity 3,949 3,768 2,989 11 Total liabilities & Shareholders' equity 8,678 8,000 7,560
  15. 15. Assets Structure •Majority of the assets composed by tangible fixed assets (common in this sector) – land, property and equipment •Fast and steady increase in quick assets •Financial assets are not so relevant 13,17% 17,13% 24,84% 15,75% 16,40% 15,22% 42,41% 40,71% 34,29% 13,27% 13,56% 14,60% 5,53% 6,86% 8,36%9,40% 4,83% 2,06% 2010 2011 2012 Structure of the assets section Assets held for sale Financial fixed assets Intangible fixed assets Tangible fixed assets Current assets Inventory Quick assets
  16. 16. Liabilities and Social Equity structure 0% 20% 40% 60% 80% 100% 2010 2011 2012 Liability & Equity Structure as % of Total Current Liabilities Non-Current Liabilities Shareholders' Equity And Minority Interests •Well distributed – however equity is lower than total debt •Current liability increased over the period •Equity decrease over the period •Mainly due to short term debt and finance lease – result of the strategy of switching from owned to lease or management
  17. 17. Liabilities nature •Loans (short and long terms) together account for 51% of the liabilities •65% the debt: long-term (mainly 2 years and 5 years) •35% of the debt: short-term loans •loans in several different currencies, all hedged by mainly by swaps •Other payables account for 25% of the liabilities and are mainly salaries and taxes 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2010 2011 2012 Liability composition Liabilities of assets classified as held for sale Long-term finance lease liabilities Deferred tax liabilities Provisions Trade payables Other payables and income tax payable Short-term debt and fin lease plus overdrafts Other long-term financial debt
  18. 18. Shareholders’ Equity Trends 35% 40% 45% 50% 2010 2011 2012 Equity in relation to Total Liabilities & Equity •The percentage represented by Equity in the Total Liability & Shareholders’Equity decreased over the period • Decrease in the Reserves - 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 2010 2011 2012 in€million Equity composition Additional paid-in capital and reserves Share Capital
  19. 19. Accor Financial Ratios ACCOR RATIOS (Consolidadet Financials) 2010 2011 2012 Liquidity ratios Current ratio 1.09 1.19 1.12 Solvency ratios Equity ratio 2.20 2.12 2.53 Productivity ratios ROS 0.07 0.09 0.09 ROE 1.11 0.01 -0.15 ROE (excl desc business) -0.12 0.01 0.01 *Total Assets and Equity taken from 2009 Assets Liabilities & Equity Assets Liabilities & Equity Assets Liabilities & Equity 2010 29% 27% 28% 46% 71% 2011 34% 29% 66% 24% 47% 2012 40% 41% 59% 36% 24%
  20. 20. Accor Financial Ratios 80% 10% 20% 90% Assets 2012 Liabilities & Equity 2012 IHG Balance Sheet composition 59% 40% 41% 60% Assets 2012 Liabilities & Equity 2012 Accor Balance Sheet composition
  21. 21. Accor Financial Ratios •Current ratio shows that Accor has no liquidity issues, current assets cover current liabilities •Equity ratio shows that around 60% of Assets are financed by Debt and 40% by Equity. The ratio increased over the period, following the already mentioned decrease in Equity •ROS remained stable over the period and is in line with sector, caused by increase in EBIT and also in Revenues •Reported ROE is very good in 2010 and then it deteriorates in the next 2 years. •Reason: in 2010 Edenred was demerged, causing a very large profit. •Excluding the effect of demerging, ROE is actually not that good, showing that Assets are financed more by debt than by Equity •However, when compared to main competitor, picture looks a lot better for Accor
  22. 22. Conclusions • Accor is a very solid group, with a balanced financial structure, good liquidity, even if level of debt is high in absolute terms (low when compared to market practice in this sector) •Company strategy of shifting to light-asset structures (Asset-right Strategy) seems to be paying off, leading to lower costs and consequently higher income, expected to be more visable in the future, when strategy goals are fully met •In the period analyzed, Accor managed to achieve the objetives defined by management, keeping in place the Investment Grade rating (BBB-) •Focus on core business and on becoming global reference in the Hospitality Industry •Sustained and active deploiment of the Asset Management program •Record expansion •€ 150 mi in free cash flow •Improvement in ratios and margins •€ 526 mi in EBIT •52.6% EBITDAR margin on management and franchise contracts
  23. 23. Suggestions •Keep working on the asset-light strategy •Increase investments on Planet 21 – aiming at becoming “Reference in Sustainability” •Since Accor is active in all segments, with too many brands, customers find it difficult to relate to the ACCOR brand. We suggest more investments in Institutional Marketing in order to create aknowledgement of the institutional brand.
  24. 24. THE END

×