One-off costs and weaker Norwegian market impact Rezidor's 2014 results
December 18 2014 - 12:03PM
Delivery of
margin enhancing objectives delayed due to fragile European
recovery and developments in Russia
One-off costs related to a hotel
closed for renovation and the challenging business climate will
impact the 2014 results of the Rezidor Hotel Group and delay the
delivery of the company's Route 2015 margin
enhancement objectives. Launched in 2011 and targeting an EBITDA
margin increase by 6-8pp by the year 2015, the turnaround programme
focusses on revenue generation, fee-based growth, cost savings, cap
utilization and asset management.
"We have made solid progress over
the past three years - addressing legacy issues and driving
profitability by rigorously reducing our cost base, pursuing
revenue generation, and successfully taking asset management
actions in loss-making hotels. The impact of these improvements
will however be reduced by the costs related to the closure and
renovation of the Radisson Blu Hotel Lyon and the economic
headwinds in Norway and Europe in general", commented Wolfgang M.
Neumann, President & CEO of Rezidor.
The re-opening of the Lyon
property in France, which was closed for renovation in January
2014, has been delayed to the second half of 2016 due to the
discovery of asbestos. The hotel owner is absorbing all the
investments for a full asbestos removal, whilst Rezidor will have
to carry the cost of the extended closure period. The negative EBIT
impact of these costs has increased to €12M of which €5.5M has been
included in Q3 and the remaining €6.5M will be reflected in Q4
2014.
Market disruptions have also
hampered the progress of Rezidor. Norway, an important market
for Rezidor producing 25% of group revenues, has weakened due to
the declining oil price, and market RevPAR for the months of
October and November has decreased by 4 and 7% against last year.
The geopolitical challenges in Russia/Ukraine have equally affected
the Route 2015 plan.
"We have taken additional steps to
further optimize our cost base by restructuring the organization.
We are closely monitoring the fragile economic recovery in Europe
and the uncertainties in Russia. Route 2015
remains an important goal; driving further margin improvements and
laying the foundations for the future. The pace of the turnaround
programme will be linked to the economic developments outlined -
but we expect to make additional progress against our targets in
2015. Our overall long-term strategy remains unchanged -
concentrated on asset-light, profitable and sustainable growth with
a particular focus on selected emerging markets", ended
Neumann.
For further
information, please contact:
Knut Kleiven, Deputy President & CFO, Knut.Kleiven@rezidor.com,
+32 475 510 406
The information
in this news release has been made public according to the Swedish
Securities Market Act and/or the Swedish Financial Instruments
Trading Act. This information was published on 18th Dec
2014.
Press release PDF
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Source: Rezidor Hotel Group via Globenewswire
HUG#1881604