Scandic Reports Year End 2018 Results

Fourth quarter in summary

  • Net sales rose by 22.8% to 4,595 MSEK (3,743). Excluding the acquisition of Restel and currency effects, net sales rose by 4.9%. For comparable units, growth in net sales was 0.8%.
  • Adjusted EBITDA increased to 487 MSEK (336), corresponding to a margin of 10.6% (9.0). Earnings per share amounted to 1.59 SEK (1.53).
  • Agreements signed for a new 234-room hotel in Munich and a 230-room hotel in Kiruna as well as the takeover of a 165-room hotel in Molde, Norway.

The year in summary

  • Net sales rose by 23.5% to 18,007 MSEK (14,582). Excluding the acquisition of Restel and currency effects, net sales increased by 6.0%. For comparable units, net sales went up 1.2%.
  • Adjusted EBITDA was 1,957 MSEK (1,573), corresponding to a margin of 10.9% (10.8).
  • Restel contributed 196 MSEK to adjusted EBITDA, corresponding to a margin of 9.1%.
  • Earnings per share amounted to 6.54 SEK (6.86). Excluding items affecting comparability, effects from finance leasing and currency effects from revaluation of loans, earnings per share rose by 7.5%.
    For 2018, the Board of Directors proposes that the AGM resolve on a dividend of 3.50 SEK (3.40) per share.

CEO’s comments in summary

It is with great pleasure that I have been trusted to be President & CEO of the leading hotel company in the Nordics. I look forward to taking Scandic forward based on our established strategy, with a focus on profitability and at a high tempo in our work to improve efficiency and competitiveness.

Market conditions in the last months of the year were somewhat better than during the previous quarter, with good demand in the Nordic countries combined with continued positive development at our German hotels. In Norway, RevPAR was impacted negatively by increased capacity in destinations such as Oslo and Bergen, while growth in capacity was relatively limited in our other markets.

Adjusted EBITDA increased compared with the weaker fourth quarter of 2017, mainly driven by improved results in Sweden and contributions from Restel.

Reported earnings per share for 2018 are somewhat lower than last year, however earnings excluding non-recurring items went up 7.5%.

At year-end, there were 5,655 rooms in the pipeline, corresponding to 11% of the hotel portfolio – a solid foundation to achieve our growth target of 5% per year over a business cycle.

During 2018, Restel contributed 196 MSEK to adjusted EBITDA, which corresponds to a margin of 9.1%. The level of investment was high and we will continue to focus on renovations in 2019. We have started to realize cost synergies in administration, sales, marketing and IT and now we will focus on strengthening our market position in Finland with the acquired hotels as a base.

We have a long-term positive view of our markets although growth in capacity at some destinations could have a temporary negative effect on the market balance during 2019. In Oslo, capacity will increase at the beginning of the year and in Copenhagen, a significant increase is expected from the second quarter. At the same time, supply growth in Stockholm and Helsinki will remain relatively limited during the year.

For the first quarter 2019, we expect like for like revenue growth of about 2% including positive calendar effects from the fact that Easter fell partly in March in 2018. In addition, we expect that more rooms in operation will contribute with about 2%-points to sales growth.

Jens Mathiesen
President & CEO