A couple of factors helped the pillows look plumper and the duvet more inviting on results day at InterContinental Hotels Group (IHG). Management announced a $1.5bn (£1.1bn) special dividend, bringing the total funds returned to shareholders to $12bn since 2003. The precipitous drop in net debt - down two-thirds - and large rise in reported profits were driven largely by the culmination of its asset disposal programme in the sales of hotels in Paris and Hong Kong.
There were some encouraging organic trends though. Europe, its second largest geography by sales, witnessed a 5.4 per cent increase in revenue per available room (RevPAR), with good trading at home in London and the provinces. The shine was slightly taken away after foreign exchange impacts pushed reported operating profits down 12 per cent (they rose 3 per cent at constant exchange rates).
The US, its largest geography by far, fired on all cylinders thanks to a turbo boost from its North America-focused purchase, Kimpton. RevPAR in the US rose 4.7 per cent while underlying operating profits spiked 10 per cent. In the Middle East, however, the low oil price dented demand.
Analysts at Numis have cut their forecasts and now expect pre-tax profits of $602m for the year to December 2016 leading to EPS of 176¢, compared with $593m and 175¢ in 2015.
| INTERCONTINENTAL HOTELS GROUP (IHG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,523p | MARKET VALUE: | £5.96bn | |
| TOUCH: | 2,522p-2,524p | 12-MONTH HIGH: | 2,967p | LOW: 2,164p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 131¢* | NET DEBT: | 166% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 1.77 | 0.53 | 159 | 55.0 |
| 2012 | 1.84 | 0.54 | 187 | 64.0 |
| 2013 | 1.90 | 0.60 | 141 | 70.0 |
| 2014 | 1.86 | 0.60 | 158 | 77.0 |
| 2015 | 1.80 | 1.41 | 520 | 85.0** |
| % change | -3 | +135 | +228 | +10 |
Ex-div: 31 Mar Payment: 13 May *Includes intangible assets of $1.2bn, or 519¢ a share **Excludes $1.5bn special dividend £1=$1.41 | ||||
