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Millennium & Copthorne expects difficult year

The hotel operator expects challenges to persist through the current financial year
February 15, 2019

Millennium & Copthorne (MLC) cut its full-year dividend again - this time by more than a third - to 4.23p as chairman Kwek Leng Beng warned 2019 would be challenging for the hotel operator. Tense US and China trade relations, Britain's upcoming departure from the European Union (EU) and rising global wages are all expected to weigh on trading this year.

IC TIP: Hold at 462p

That said, the group is on track to re-open its London Mayfair hotel in the second quarter. The property has been permanently closed for refurbishment since July 2018 and partially closed since 2017. Having previously served as one of the group’s most profitable sites, its closure took a £20m and £12m bite out of sales and operating profits, respectively, last year. Elsewhere, the New York hotels are still loss-making, despite accounting for 18 per cent of total hotel revenue, due to what the company calls an "inflexible operating cost structure" - a result of employing trade union staff.

Ahead of these results, analysts at Berenberg expected EPS of 29.2p in 2019, rising to 30.8p in FY2020.

MILLENNIUM & COPTHORNE HOTELS (MLC) 
ORD PRICE:462pMARKET VALUE:£ 1.50bn
TOUCH:461.5-462p12-MONTH HIGH:577pLOW: 448p
DIVIDEND YIELD:0.9%PE RATIO:35
NET ASSET VALUE:853pNET DEBT:22%
Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20140.8318834.013.6
20150.8510919.96.4
20160.9310824.07.7
20171.0114738.16.5
20181.0010613.14.2
% change-1-28-66-35
Ex-div:14 Mar   
Payment:17 May