Despite concerns over a peak in its US sectoral cycle and the exposure of parts of its business to the oil and gas markets, shares in Intercontinental Hotels (IHG) rose following the group's annual results announcement. Operating profits of $707m (£569m) before exceptional items came in 2 per cent ahead of company-compiled consensus forecasts and beat brokerage Numis' own forecast by $10m, representing year-on-year growth of 4 per cent. Reported revenues and pre-tax profit were both skewed by the previous year's sale of the InterContinental Paris and Hong Kong hotels, which had resulted in a one-off disposal gain of $880m.
This year's success was fuelled by a 1.8 per cent increase in revenue per available room (RevPAR) and a 3.1 per cent rise in net room numbers. RevPAR rates for the US slightly lagged the wider market growth due to IHG's exposure to oil-producing states. But a whopping 39 per cent increase in free cash flow to $646m (which included a $95m cash windfall following renegotiation of long-term partnership agreements) means shareholders are in for another bumper pay-day via a special dividend and share consolidation, this time worth $400m.
Analysts at Numis expect pre-tax profits of $652m for the year ending December 2017, giving EPS of 215¢ (from $620m and 203¢ in FY2016).
| INTERCONTINENTAL HOTELS (IHG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 3,919p | MARKET VALUE: | £7.74bn | |
| TOUCH: | 3,919-3,922p | 12-MONTH HIGH: | 4,029p | LOW: 2,459p |
| DIVIDEND YIELD: | 1.9%* | PE RATIO: | 25 | |
| NET ASSET VALUE: | ** | NET DEBT: | $1.5bn | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 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 |
| 2016* | 1.72 | 0.59 | 195 | 94.0 |
| % change | -5 | -58 | -62 | +11 |
Ex-div: 4 May Payment: 22 May *Excludes special dividends worth 202.5¢ a share in 2016, and 632.9¢ in 2015 **Negative shareholder funds £1=$1.24 | ||||
