With a candour unusual in corporate reports, Millennium & Copthorne (MLC) chairman Kwek Leng Beng labels the group’s first-half performance "disappointing". Sterling's rise is partly to blame. Even if you strip currency effects, however, pre-tax profits fell 9 per cent to £58.4m due to high operating costs and a lower contribution from joint ventures.
Mr Beng says the company must adopt a "cautious outlook" for the rest of the financial year. While the company's full-year guidance remains unchanged for now, a tight eye on costs in "uncertain markets" will be needed to meet market expectations.
The main concern is MLC’s Asian business, specifically Singapore, which is suffering from a depressed hospitality market and fewer visitors from China. The group's hotel revenue across the region fell 1.3 per cent as the Singapore business saw its average room rate fall 2.7 per cent and occupancy dip nearly a percentage point.
This is in stark contrast to the US business, which grew hotel revenue by 1.9 per cent as revenue per available room jumped 7.7 per cent. This reflected a positive contribution from the new Novotel New York Times Square, the closure of the Millennium Hotel St Louis and the re-opening of the Millennium Hotel Minneapolis.
Prior to these results, analysts at Credit Suisse expected pre-tax profits of £138m for the full-year, giving EPS of 30p, down from 73p in 2013.
MILLENNIUM & COPTHORNE (MLC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 577p | MARKET VALUE: | £1.87bn | |
| TOUCH: | 575-580p | 12-MONTH HIGH: | 613p | LOW: 517p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 648p | NET DEBT: | 6% | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 382 | 68.6 | 14.0 | 2.08 |
| 2014 | 381 | 58.8 | 9.4 | 2.08 |
| % change | - | -14 | -33 | - |
Ex-div: 13 Aug Payment: 3 Oct | ||||
