Net sales increased by 11.5% to 14,582 MSEK (13,082) due to higher RevPAR and more rooms in operation. Adjusted EBITDA totaled 1,570 MSEK (1,513), corresponding to a margin of 10.8% (11.6).
Fourth quarter in summary
- Net sales increased by 8.1% to 3,743 MSEK (3,463) due to more rooms in operation and higher RevPAR.
- Adjusted EBITDA totaled 333 MSEK (457), corresponding to a margin of 8.9% (13.2). The comparative period was positively impacted by a non-recurring compensation of 65 MSEK.
- Lower occupancy in Stockholm, combined with high costs affected results negatively in Sweden in the quarter.
- Earnings per share amounted to 1.52 SEK (2.79). Excluding currency effects related to the revaluation of loans, earnings per share totaled 1.48 SEK (2.90).
- The acquisition of the Finnish hotel company Restel was completed in December. The acquisition included 43 hotels and the consideration amounted to 1,160 MSEK.
- Net debt/adjusted EBITDA including Restel proforma was 2.1 at year-end thanks to strong operating cash flow in the fourth quarter
The year in summary
- Net sales increased by 11.5% to 14,582 MSEK (13,082) due to higher RevPAR and more rooms in operation.
- Adjusted EBITDA totaled 1,570 MSEK (1,513), corresponding to a margin of 10.8% (11.6).
- Earnings per share amounted to 6.86 SEK (8.58). Excluding currency effects related to the revaluation of loans, earnings per share totaled 7.04 SEK (6.85).
- In 2017, Restel had pro forma adjusted EBITDA totaling 196 MSEK, corresponding to a margin of 9.1%.
- For 2017, the Board of Directors proposes a dividend of 3.40 SEK (3.15) per share paid in two equal amounts on two occasions during the year.
Even Frydenberg President & CEO commented:
Scandic’s sales growth was 8 percent in the fourth quarter, driven mainly by contribution from new hotels and increased RevPAR in Norway and Finland. Despite growing sales, Scandic’s EBITDA dropped during the quarter, mainly due to lower profitability in our Swedish operations. RevPAR in Stockholm was weak at the end of the quarter because of increased capacity during the year. Earnings were also affected by unsatisfactory cost-efficiency as we didn’t fully adjust our costs to meet the lower occupancy in the Stockholm region. We have taken measures to improve cost-efficiency in Sweden combined with increased sales efforts. We are convinced that the increased capacity in Stockholm will be absorbed by the market over time.
Our operations in Sweden outside of Stockholm generally developed well and results continued to improve in Norway and in Other Nordics & Europe. Thanks to a strong cash flow, our gearing is in the lower range of our target for 2-3x adjusted EBITDA despite the acquisition of Restel at the end of the year.
The acquisition of Restel, with 43 hotels and 7,600 rooms, was completed in the end of December and Scandic is now the clear market leader with an extensive nationwide hotel network in Finland. The Finnish market was strong in 2017 and it is gratifying to see Restel’s improvement in earnings during the year and that the EBITDA margin improved to over 9 percent. We have already started rebranding the Restel hotels and see significant potential for synergies when the hotels are able to fully access our strong distribution capacity.
During the quarter, we added three hotels with lease agreements to our pipeline, including a big new conference hotel in Frankfurt. In total, at the end of 2017, we had 18 hotels with almost 6,000 rooms in the pipeline. We expect continued positive underlying sales growth in the first quarter, excluding calendar effects, in line with the development in the fourth quarter. In addition, Restel will contribute to our revenues from January 1, 2018.