Accor SA (AC), Europe’s largest hotel operator, will accelerate an expansion plan after the French company reported first-half profit that beat analysts’ estimates.
Earnings before interest and taxes rose to 212 million euros ($266 million) from a restated 204 million euros a year earlier, the Paris-based company said today in a statement. Analysts expected profit of 206.5 million euros, the average of 10 estimates in a Bloomberg survey. The year-earlier figure was changed to reflect the sale of Accor’s Motel 6 budget chain to Blackstone Group LP.
Accor forecast full-year earnings before interest and taxes will be from 510 million euros to 530 million euros. That compares with 515 million euros in 2011. Accor’s sale of Motel 6 is scheduled for completion in October as Chief Executive Officer Denis Hennequin expands operations in Latin America and the Asia-Pacific region.
Earnings gained from a combination of revenue growth and higher margins as Hennequin scales back the company’s ownership of the hotels that it operates. Revenue advanced 3.6 percent to 2.72 billion euros, excluding acquisitions and disposals, rising fastest in Latin America. Accor agreed last month to acquire Grupo Posadas for $275 million to boost its presence in Brazil.
“These were a good set of results and in line with expectations,” said Catherine Rolland, an analyst at Kepler Capital Markets who has a buy rating on the shares. Accor fell in Paris trading today after a “good performance since the start of the year,” she said.
Accor declined 57 cents, or 2.2 percent, to 25.86 euros at 1:57 p.m. in Paris. The shares had risen 35 percent since the start of the year to yesterday’s close, while the CAC 40 Index gained 8.6 percent.
“These results reflect a strong growth in our performance,” Hennequin said on a conference call. By the end of 2016, 80 percent of Accor’s hotels will be franchised or under management contracts from 56 percent now, he said. The company expects to add 108,700 rooms by then.
Hennequin, who joined from McDonald’s Corp. last year, is expanding Accor’s global presence by running operations under its Sofitel, Novotel and Ibis brands. It has sold buildings and leased them back, allowing Accor to pay debt and avoid tying up capital in property.
Management and franchise fees rose 20 percent to 233 million euros in the first half, the company reported in July. Net debt totaled 804 million euros at the end of June.
The company will complete the sale of Motel 6 in North America to Blackstone for $1.9 billion. A 612 million-euro writedown relating to the chain caused Accor to report a net loss of 532 million euros, or 2.34 euros a share. A year earlier it reported net income of 41 million euros, or 18 cents.