Profit & Loss Account. Operational Ratios. Stock Performance. (million Euros)

Transcription

1 Profit & Loss Account (million Euros) RevPAR % Ebitdar margin 24.9% 25.3% -38 bp Ebitda margin 17.9% 18.2% -27 bp Ebitda margin ( underlying) 15.1% 14.4% +62 bp Ebt margin 4.5% 4.8% -35 bp Net profit margin 3.6% 4.0% -38 bp Stock Performance MEL VOLUME MEL LAST IBEX LAST Week Average Volume 1,735, Week High, November 6 th Week Low, June 4 th Market cap ( 5.910) Nov. 6 th ,092,0 / $1,402.7 Bloomberg: MEL SM ; Reuters: MEL.MC Sept 2012 Sept 2011 % REVENUES 1, % EXPENSES ( ex - Operating leases) % EBITDAR % Rental expenses % EBITDA % Depreciation and amortisation % EBIT % Total financial profit / (loss) (58.2) (53.8) -8.3% Profit/(loss) from Associates & JV (8.8) (5.9) -48.5% Continuing EBT % Discontinuing Operations Profit before taxes and minorities % Net Profit % Net Profit attributable % Operational Ratios 0 Highlights RevPAR, EBITDA and underlying EBITDA increased by 8.0%, 4.3% and 11.5%. Results are broadly explained by the healthy RevPAR evolution, fully boosted by prices and largely explained by the resorts in LatAm, Spain and the evolution of the European Gateway cities, while the performance of the Spanish cities remained sluggish excepting Barcelona thanks to its leisure component. The performance of the hotel business is overshadowed by the lower contribution of Real Estate activity (- 3.9 mn) and the impact of the non securitization of the customer portfolio (- 3.5 mn) within the Club Meliá - Vacation Club Business. When excluding these two effects, the underlying EBITDA 09m2012 increases by 11.5%, while its margin improves by 62 bp. Below the EBITDA level, Financial Result was mainly affected by the increase in spreads. Worldwide resorts to lead RevPAR evolution in 2013 In LatAm & Caribbean, the booking pace of the main feeder markets (North America & LatAm) along with the evolution of the Business Groups, point towards a positive first quarter 2013, coinciding with the high season. The consolidation of the 2 Paradisus resorts in Playa del Carmen will also stimulate this trend. In Spanish Resorts, negotiations with major European Tour Operators indicate slight price increases for summer 2013, expected to be reinforced by the evolution of the centralized channels. A more cautious stance is advisable regarding cities in Spain, where the Company will focus on leisure segments, maximizing revenue opportunities from Key Accounts and focusing on international travellers, especially in the upscale market in Madrid and Barcelona. In major European cities, the macroeconomic situation of the Euro Zone and U.K makes the Company to remain cautious, focusing the strategy on extending and developing the client account base in London, Paris and the main German cities. Within the e-commerce strategy, notes the evolution of the OTA s and especially the role of direct sales channels which up to September contributed 134 mn of sales (+13.5%over last year). Going into 2013, it is expected additional % increase, allowing a reduction in intermediation costs and leading to better yield management. Currently some 80% of the operating profit is generated outside Spain. Strengthening of international positioning Total pipeline reaches 34 hotels and ~11,000 rooms (~14% of current Rooms Portfolio), of which 91% will be added internationally and 58% in emerging markets - Brazil, Colombia, Costa Rica, Venezuela, China, Indonesia, Vietnam and Cape Verde. All incorporation will be under low capital intensive formulas (Variable Leases 22%; Management 78%). Debt management to reduce financial expenses The Company recently faced Preferred Shares amortization through the Offer of Exchange of ordinary bonds, achieving a 76.4% acceptance. As a result, the Company issued 76.4 mn bond with maturity July Major benefits for Meliá are to lower the average cost of debt (new bonds at 7.8% interest rate versus previous 12.3%) and therefore the reduction of financial expenses (by around 15 mn during the period; 4 Mn per annum on a normalized basis). Additionally should be considered the generation of 5.3 mn financial income to include in the Financial Result in Net debt reduction by year-end and compliance with covenants Up to September net debt represents 1,104.6 million (6% reduction versus Sept. 11). The Company reiterates its commitment to debt reduction on the back of the further asset disposals in Q4 in line with Melia s asset light strategy going forward. Report released on November 7, 2012

2 Table of contents 1. Information on Operations Hotel Business Club Meliá Real Estate Other Business and Overheads Income Statement...9 2

3 1. Information on Operations 1.1. Hotel Business RevPAR for owned and leased hotels has increased by +8.0% up to September, explained by a +10.7% increase in the average room rate combined with a slight decrease (-2.4%) in occupancy levels. In 3Q2012, RevPAR went up by +7.1%, once again explained by price increases (+10.0%). During the first nine months, ARR has increased in around 55% of the owned and leased hotels but also when considering all hotels in the Company s network (Owned, Lease and Management) America In America RevPAR up to September grew by 28.8% (+17.4% in dollars) showing an improvement in figures for the third consecutive quarter (Q %; Q %, Q %).The improvements have been possible mainly thanks to the Company s strategy focusing on less price-sensitive market segments (e.g. business groups or individual leisure), thus allowing ARR increases of +32.1%. Strong evolution of LatAm resorts, even during the low season By country, the Dominican Republic showed figures much improved over the previous year. The third quarter, even though it is the low season in the country, saw high occupancy rates, principally due to the success of a pricing strategy focused on the launch of innovative offers during the summer season such as the resort credit, used to get upgrades and credit in casinos, treatments in the Yhi Spa, etc. In particular, the evolution of the Paradisus Palma Real (496) was of note. In 2012 the hotel will see successful results, close to levels seen at the peak of the cycle. Mexico also reported good results led by the evolution of hotels in Cancun and Playa del Carmen. In the latter, it is worth noting the strong positioning of the room rate in the Paradisus La Perla (394) and Paradisus La Esmeralda (512), which up to September achieved figures above budget. Going into 2013, these two hotels have a strong Group base, which will contribute to further improvements in room rates. Lastly, of note is the good performance of Venezuela and Puerto Rico. In the latter the local market has become a major feeder market for the Gran Meliá Puerto Rico, helping the hotel to increase occupancy rates. In Venezuela the Gran Meliá Caracas benefited from higher sales of superior rooms given demand during the pre-electoral period in the country, contributing to higher average room rates. In terms of Available Rooms the Americas division achieved an increase of +15.0% versus last year, mainly explained by the incorporation of the two Paradisus resorts, La Esmeralda and La Perla in Playa del Carmen (Mexico). 3 ME Madrid

4 1.1.2 EMEA In EMEA, RevPAR 09M2012 went up by 5.4%, thanks to a 7.1% improvement in prices, highlighting the acceleration throughout the year of both statistics. By country, France registered the best performance (RevPAR +14.1%) due to a business strategy focused on increasing ARR including actions such as the increase in sales through direct sales channels, the replacement of clients from those countries hardest hit by the crisis and the control of room allotments for tour operators and key accounts that are more sensitive to prices. It is also worth mentioning that up to September this also led to the RGI (Revenue Generated Index) of the French hotels being significantly above the market average. Strong performance in European Gateway cities In the U.K, the Meliá White House also strengthened results, with a RevPAR increase of +11.0% (+2.3% in GBP). In spite of the fact that the impact of the Olympic Games on the overall London hotel business was more modest than initial market expectations (due to the macroeconomic situation and the impact of over 4,000 new hotel rooms in the city in 2012), in August the results of the Meliá White House hotel saw an excellent performance versus the competitive set with a RevPAR increase of 43% (+27.6% in pounds). In Germany, RevPAR increased by 6.9% thanks to efforts focused on maximising Trade Fairs revenues, Key accounts and Meeting, Incentives, Congresses and Events (MICE) activity. After the summer break, Trade Fairs and Congresses helped generate very strong demand, especially in Berlin, Munich and Dusseldorf, where during the fourth quarter the Company will benefit from the celebration of important events such as the EASD congress in Berlin or the Expo Real, Expofarm, Electronica and the Oktoberfest in Munich. Regarding the tour operation business, the Company expects to see strong results in the last quarter, especially in cities with Christmas markets and in prime destinations around New Year s Eve. In Italy, the slowdown in domestic demand, the decrease in the number of meetings and events held in the country due to travel savings policies, increases in hotel supply, and strong downward pressure on prices, led to lower occupancy levels in our hotels, especially in the Meliá Milano, a hotel that was also affected by the loss of some air crews. Despite this, in the third quarter the negative trend softened, mainly due to the positive contribution of the Meliá Genova and the focus of the Company on leisure segments. Going into the final quarter, Meliá also expects a good performance in the Trade Fair and Congress segment given the numerous events scheduled in Milan in October and November. In EMEA, Available Rooms decreased slightly by -1.2%. The incorporation of the Meliá Genova (September 2011) almost offset the disaffiliation of Tryp Verona (August 2011) and the sale of the Tryp de Saxe (December 2011) and Tryp Blanche Fontaine (March 2012) Premium Europe RevPAR in Premium Europe increased up to September by 2.4% after a positive third quarter which saw a +6.9% RevPAR increase. Third quarter RevPAR growth driven mainly by price The main driver of results was the good performance of the individual leisure segment in Q3, partially thanks the exposure to international feeder markets, which had a positive impact in the Gran Meliá Don Pepe (201) in Marbella and Meliá de Mar (144) in Balearic Islands, both in Spain. The Adults Only concept in the Meliá de Mar hotel helped generate significant price increases, providing an example of product repositioning with a consequent improvement in profitability. The Gran Meliá Don Pepe also reported strong results, partially helped by the refurbishment of ocean panoramic suites which led to an improvement in rates (ARR 09M %). It is worth noting that up to date, the Gran Meliá Don Pepe is reporting a Gross Operating Profit (GOP) close to its historical peak. On the negative side was the performance of a property in Lanzarote (Canary Islands), where the Company implemented operational and marketing changes to reverse the trend such as the implementation of the Adults Only concept. 4

5 Regarding city hotels, the best performance has been seen in hotels with a mix of leisure and business segments mainly due to their location, such as the Gran Meliá Victoria (Balearic Islands, Spain), and in hotels with a higher exposure to the international business segment such as the Gran Meliá Fénix (Madrid), which saw an increase in room rates even though ARR fell in its direct competitive set. In the international arena, is worth noting the contribution of the Gran Meliá Rome that up to September positioned as the hotel of the Company with higher average room rate, and which together with the imminent incorporation of the ME London this is expected to have a positive impact on: a) boosting our Premium brands internationally, b) strengthening the Company s Group base, c) attracting alternative feeder markets; d) and reaffirming the support of preferred partners. Available Rooms +1.4% in Premium Europe went up due to the incorporation of Gran Meliá Rome in April 2012 (116 rooms) Spanish Resorts (Mediterranean) RevPAR in Spanish resorts increased by a healthy +3.2% given the slight drop in occupancy levels and rates rose by +7.8%. By region, following the evolution seen last quarter, the Balearic Islands (RevPAR +10%) was the best performer, followed by some destinations in mainland Spain such as Alicante and Malaga. Resorts in Spain lead by the Balearic Islands This trend concurs with the general market trend, which in summer 2012 was characterized by a strengthening of foreign demand in Spain, and particularly in the Balearic Islands, reporting figures near the peak in 2007, largely attributable to the increase in the Russian and Scandinavian feeder markets as well as the effect of the instability in Egypt and other countries in the Eastern Mediterranean. The strong rebound in foreign demand could not offset the decline in domestic demand, which mainly affected second tier destinations. In the Balearic Islands, the Company has benefited from the success of initiatives such as the implementation of an All Inclusive service in some resorts such as the Sol Falcó or Sol Mirlos Tordos where this strategy allowed double digit RevPAR growth. The Company also emphasizes the success of the Calvia Beach Resort (which comprises the Sol Wave House and Beach House hotels, along with the first Wave s attraction in Europe, Wave House Mallorca, artificial wave attraction and Nikki Beach Mallorca the beach club), which after inauguration in early June achieved the following in the launch phase and initial operations: a) greater integration and appreciation of the area by local residents and feeder markets; b) job creation increasing business confidence levels; c) the attraction of new markets and customer segments; d) improvements in the destination image, security and international positioning. On the negative side, the Canary Islands performed below last year given the strong comparables in 2011 and the effect of the change of operations of the Sol Tenerife (522) hotel which since last December has been operated under a management contract. Available Rooms -11% were mainly affected by the change in the operating regime of the Sol Tenerife (December 2011) and Sol Antillas Barbados (June 2011), together with the sale of the Sol Galúa (December 2011). 5

6 1.1.5 Urban Spain (Spain) Positive figures in Q3 affected by the Leisure segment Contingency plan in Spanish cities & focus on leisure as Key drivers in 2013 Up to September, RevPAR in the Division declined by -1.4%, after a third quarter that saw slightly positive figures (RevPAR Q3 +0.6%). This evolution was possible thanks to the better performance of the leisure segment during the third quarter, which benefited hotels with a better mix of corporate and leisure guests, normally due to the location of the hotel. In this regards, positive results were seen in the hotels located in Malaga, Cadiz, Alicante belonging to mainland Spain and Palma de Mallorca in the Balearic Islands. On the other hand, the rest of the hotels located in cities further away from coastal areas remained weak, also taking into consideration that the third quarter coincides with the traditional summer break for business travel. Year to date it is worth mentioning not only the performance of the hotels mentioned above, but also the evolution of hotels in Barcelona (which registered a 5.1% RevPAR increase in 09M2012), partially offsetting the weaker results of second-tier cities. Going into the business segmentation, the leisure segment reported good figures (mainly in individual travel) mostly thanks to the contribution from alternative feeder markets such as Latin America and Asia. On the other hand, segments such as Individual business, Groups (including public agencies), Crews and lay-overs, showed poor results. Going forward, the Company continues with the implementation of the Contingency Plan in the Spanish cities hotels, which includes actions such as the renegotiation of lease agreements, the generation of synergies on a local basis thanks to the implementation of additional clusters (sales, credit, etc) but especially the disaffiliation of hotels that do not create brand value. In this regards, last quarter the Company disaffiliated the Meliá Alto Aragon (Formigal, Spain), the Tryp Sondika (Bilbao, Spain) and the Tryp Albayzin (Granada, Spain). Furthermore the effect of the repositioning of some hotels in Madrid after refurbishment and maintenance should be a driver for the achievement of better results. Going into 2013, it is expected a continuation on the demand s status from the business travel segment that could be partially offset by the better performance of the individual leisure, which is likely to maintain a reasonable performance in tier one cities (especially Barcelona). In second tier destinations, given the lack of demand, the focus will be on maintaining the occupancy levels to avoid loosing market shares. Available Rooms -3.8% went down principally due to the disaffiliations of the Tryp Iberia (October 2011), Tryp Urdanibia, Tryp Sancho Ramirez (both December 2011), Tryp Sondika (March 2012), and Tryp Albayzin (April 2012), partially offset by the incorporation of the Meliá Valencia in September 2011 and Meliá Villaitana in January

7 Table 1: Hotel statistics Owned and Leased hotels 12 / 11 (RevPAR & A.R.R. in Euros) % Occupancy RevPAR A.R.R. Available rooms AMERICA % ,844.8 % o/ % 28.8% 32.1% 15.0% % ,603.9 EMEA % ,490.0 % o/ % 5.4% 7.1% -1.2% % ,507.4 PREMIUM EUROPE % % o/ % 2.4% 5.2% 1.4% % MEDITERRANEAN % ,321.5 % o/ % 3.3% 7.8% -11.0% % ,608.8 SPAIN URBAN % ,495.4 % o/ % -1.5% -0.4% -3.8% % ,593.3 TOTAL % ,636.2 % o/ % 8.0% 10.7% -1.8% % ,791.3 Table 2: Hotel revenues split 12 / 11 for owned / leased hotels Room Revenues F&B and Other Total Revenues AMERICA % o/ % 25.7% 34.7% EMEA % o/ % 1.4% 3.5% PREMIUM EUROPE % o/ % 5.5% 4.3% MEDITERRANEAN % o/ % -15.0% -10.6% SPAIN URBAN % o/ % -4.1% -4.9% TOTAL % o/ % 6.8% 6.4%

8 1.2 Club Meliá During the first 9 months of 2012, the Club Meliá business refocused its efforts on optimizing the quality and profitability of interval sales and as a result has significantly reduced Spanish sales operations, 11 including Madrid, as well the Canary Island resorts in Salinas and Tamarindos. As part of the same process, sales have also been suspended in Puerto Rico, and in Me Cancun after to its sale last June. In addition, the pace of sales at our vacation club at the Gran Melia Palacio de Isora has shown the impact of the downturn in the Spanish economy. The above operational changes, in addition to an increase in biannual sales from 46% of total in 2011 to 60% in 2012, have resulted in a -15.3% decrease in number of weeks sold, despite which overall net sales volume is only -0.9% lower than prior year. This is partly due to an offsetting increase in average price of 20.6% and a significant improvement in closing efficiency from 11.9% in 2011 to 13.7% in In terms of EBITDA, through the end of Q3 of 2012, results are lower than those reported in prior year due to the fact that 2011 benefited from a gain of approximately 3.5 million euros as a result of receivables securitization in June 2011, something which has not occurred and is no longer planned for this year. 1.3 Real Estate During the quarter there were no additional asset disposals, meaning that the total amount of capital gains generated during the year remains at 37.1 million Euros (8.6 million Euros through the sale of Tryp Blanche Fontaine and 28.5 million Euros from the sale of ME Cancun), included within the 49.3 million Euros reported by the Real Estate Division. Regarding the other real estate businesses, in the Dominican Republic total revenues increased by 1.4 million Euros given the sale of one plot of land and one villa in the Dominican Republic. In Venezuela, revenues coming from the rentals of the shopping premises generated an additional 0.6 million Euros. 1.4 Other Business and Overheads At the revenues level, the Other Business and Overheads item increases by 16.7 million Euros mainly due to higher revenues from the tour operator activity in Cuba (aprox. 5 million Euros), higher sales commissions (aprox. 3.7 million Euros) and major fees from the management and franchise contracts (aprox. 2 million Euros). 8

9 2. Income Statement Revenues Total revenues increased by 5.9% (57.6 million Euros). The split by division remained as follows: Revenues from the Hotel Division increased by 6.4% (+48.8 million Euros). Real Estate decreased by -3.2% (-1.6 million Euros), Club Meliá fell by -4.8% (-3.2 million Euros) mainly due to the lack of the securitization of the portfolio while Other Revenues increased by 15.7% (+13.6 million Euros) mainly due to higher management fees, higher revenues coming from tour operation activity in Cuba, and higher commissions. Operating Expenses Raw Materials increased by +5.7% (+6.8 million Euros) due to the changes in the scope of consolidation mostly due to the incorporation of two resorts in Playa del Carmen and the appreciation of the US dollar. When excluding the above mentioned effects raw materials would have remained flat (+0.3%). Personnel Expenses went down by -2.2% (-6.8 million Euros) affected by a change in the accounting system which makes the Company account for staff recruited in Mexico through Employment agencies as External Services rather than Personnel Expenses. Excluding this extraordinary effect, personnel expenses would have increased by 2.8%. On a comparable basis, personnel costs increased by 2.3% mainly due to the effect of the inflation in Venezuela. Other operating expenses increased by +15.9% (+46.8 million Euros). On a comparable basis, when excluding changes in the scope of consolidation, the exchange rate effect and the aforementioned reclassification in Personnel Expenses, the item increases by 3.7% (10.3 million Euros) mainly due energy expenses ( 3.4 million), maintenance and repair expenses ( 2.8 million) and higher advertising ( 0.9 million). The remaining could be linked to consulting expenses and commissions. Rental Expenses have increased by +4.4% (+3.0 million Euros) due to the Sale & Lease back operations (Meliá Lebreros, Meliá Milan and Meliá Atlanterra) and changes in the perimeter. When excluding the above mentioned effects, rental expenses would have remained flat thanks to the renegotiation of rental agreements, particularly in Germany. Ordinary Profit / Net Profit The financial result worsened by 8.3% (4.5 million Euros) mainly due to: Higher interest expenses principally due to the increase in the spreads due to the renewal of the credit facilities and the signature of new loans throughout the year, together with strong comparables given the interest capitalization in 2011 linked to the construction of two resorts in Playa del Carmen and Me London. Partially offset by higher financial income generated through the sale of a financial stake in a resort in Los Cabos (Mexico) in 2012 ( 7.8 million Euros), together with higher interest generated by the loans to associates. Less Exchange Expenses by -4.1 million Euros given the different dollar behaviour during the period. At the Associates level, this figure decreased by -2.9 million Euros mainly due to the combination of two effects: the positive performance of Gran Meliá Palacio de Isora (+1.1 million Euros) together with the incorporation of Meliá Milano after its sale in 2011, offset by the contribution of the Calvia Beach Resort, which reported negative figures due to its financial burden as well as the effect of the depreciations. The tax rate increased to 17% from 16% in September

10 Table 3: Meliá Consolidated Income Statement (Million Euros) Sept 2012 Sept 2011 Hotel Revenues Real Estate Revenues Club Revenues Other revenues Total Revenues 1, % Raw Materials (127.7) (120.9) Personnel expenses (302.6) (309.3) Other operating expenses (341.0) (294.2) Total Operating Expenses (771.2) (724.4) 6.5% EBITDAR Rental expenses (71.6) (68.6) EBITDA % Depreciation and amortization (71.0) (69.8) EBIT (OPERATING PROFIT) % Net Interest Expense (47.5) (39.0) 0 Exchange Rate Differences (1.4) (5.5) Other Interest Expense (9.4) (9.2) Total financial profit/(loss) (58.2) (53.8) 8.3% Profit/(loss) from Associates and JV (8.8) (5.9) Profit/(loss) from ordinary activities % Extraordinary profit/(loss) Profit before taxes and minorities % Taxes (7.9) (7.5) Group Net profit (loss) % Minorities (1.6) (1.2) Profit (loss) of the parent Company % 10 10