First quarter in summary
- Net sales rose by 22.5 percent to 3,791 MSEK (3,095), driven by more rooms in operation and the Restel acquisition.
- The Easter holiday fell partly in March, so the quarter is not fully comparable with the first quarter of 2017. It is estimated that calendar effects affected net sales negatively by approximately 4 percentage points.
- Net sales for comparable units dropped by 1.2 percent but rose by approximately 3 percent when adjusted for calendar effects.
- Adjusted EBITDA totaled 115 MSEK (154), corresponding to a margin of 3.0 percent (5.0). The margin was affected negatively by calendar effects and the consolidation of Restel.
- The integration of Restel is progressing according to plan. At present, 17 of the acquired hotels are operating under the Scandic brand. The rebranding of all Cumulus hotels is expected to be finalized in the second quarter of the year.
- Integration costs related to the Restel acquisition were 24 MSEK.
- Establishment of a 2,000 MSEK Swedish commercial paper program that will reduce financing costs. At the same time, the total credit line was increased by 500 MSEK.
- Earnings per share amounted to -1.39 SEK (-0.35). Excluding the effect of finance leases and currency effects from the revaluation of loans, earnings per share totaled -1.38 SEK (-0.27).
CEO’s comments in summary:
Scandic’s sales growth was 22.5 percent in the first quarter, driven primarily by more rooms in operation. In addition to rooms added through the Restel transaction, there was a significant contribution from the hotels we opened in 2017. Hotels that opened during the quarter in Lilleström, Århus, Frankfurt and Helsinki during the quarter added a total of more than 800 rooms.
Due to the fact that Easter fell partly during the first quarter of the year, net sales for comparable units decreased by 1.2 percent. We estimate that these calendar effects had a negative impact on sales of approximately 4 percentage points, which means that underlying revenue growth was about 3 percent. Underlying growth was positive in Sweden, Norway and Finland and marginally negative in Denmark. In Stockholm, RevPAR continued to decrease due to increased capacity.
Adjusted EBITDA amounted to 115 MSEK (154) despite negative calendar effects. The measures taken to adjust the cost for the lower occupancy rate mainly in the Stockholm region have given effect and we will continue to adjust costs regularly to market conditions.
The integration of Restel started at the beginning of the quarter and it has gone according to plan. At present there are 17 former Restel hotels operating under the Scandic brand and we expect to convert all Cumulus hotels into Scandic hotels during the second quarter. We have identified cost synergies in a number of areas in Restel such as marketing, sales, purchasing and IT that are expected to have a positive impact in 2018. However, we expect the greatest potential on the revenue side when we fully integrate the hotels with Scandic’s strong distribution capacity. During the quarter, Restel had only a marginal impact on adjusted EBITDA in Finland.
For the second quarter of the year, we expect positive revenue growth for comparable units, adjusted for calendar effects, but at a slightly lower level than in the previous quarter. RevPAR in Stockholm is expected to remain under some pressure while we expect more positive development in other parts of Sweden. We see conditions for continued positive development in Finland and Norway.
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