Intercontinental Hotels (IHG) is under pressure from an activist investor, hedge fund Marcato Capital Management, to sell itself to the highest bidder. Marcato, which is based in San Francisco and owns 3.8 per cent of IHG, urged management to consider a deal after IHG’s board reportedly spurned a £6bn takeover bid earlier in 2014. While there’s no comment on the stalemate with Marcato, IHG is soothing investors’ concerns with a big hike in its interim dividend - even though it paid out $750m last month by way of a special dividend.
In the first six months, the franchise business fuelled a 9 per cent improvement in underlying revenue in the US, with underlying operating profit up 7 per cent (underlying figures exclude the impact of property disposals and other one-off charges). Europe also performed well, especially the UK business, with high single-digit growth in both London and the provinces.
But continued political unrest in Thailand and Egypt hurt trading across Asia and the Middle East. Underlying revenues were flat, while operating profit dropped 12 per cent. The Chinese business – which IHG accounts for separately – managed to outperform the wider market, but the government clampdown on corruption and ostentatious consumption still dampened food and beverage revenues; these only grew 5 per cent, compared to room revenues up 9 per cent.
Brokerage Numis expects pre-tax profits of $565m for the full-year, giving EPS of 152ȼ.
INTERCONTINENTAL HOTELS (IHG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,274p | MARKET VALUE: | £ 5.4bn | |
| TOUCH: | 2,273-2,274p | 12-MONTH HIGH: | 2,494p | LOW: 1,756p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 36 | |
| NET ASSET VALUE: | * | NET DEBT: | $1.03bn | |
| Half-year to 30 June | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
|---|---|---|---|---|
| 2013 | 936 | 462 | 129 | 23 |
| 2014 | 908 | 377 | 93 | 25 |
| % change | -3 | -18 | -27 | +9 |
Ex-div:20 Aug Payment:26 Sep *Negative shareholders' funds £1 = $1.69 | ||||
