InterContinental Hotels Group PLC (IHG, IHG.L) on Tuesday reported a sharp decline in third-quarter profit, as revenues declined year-over-year, hit by the global economic crisis that reduced travel. Adjusted profit topped Wall Street view. Looking ahead, the company said that it sees signs of occupancy stabilising, but rate is still under considerable pressure across the board.
Profit attributable to equity holders of the parent declined to $67 million or 22.7 cents per share from $91 million or 31.5 cents per share in the previous year. Exceptional operating costs in the third quarter were $44 million, including a $21 million non-cash goodwill write down and $18 million of severance costs.
Adjusted profit attributable to equity holders of the parent was $94 million or 31.5 cents per share. On average, three analysts polled by Thomson Reuters expected the company to earn 26 cents per share for the quarter.
Profit from continuing operations slipped to $68 million or 22.7 cents per share from $91 million or 31.5 cents per share in the prior year. Pre-tax profit for the quarter declined to $67 million from $92 million in the prior year.
Revenue for the quarter dropped to $401 million from $496 million in the previous year. Analysts estimated revenues of $417.43 million for the quarter.
Operating profit slumped to $80 million from $120 million. Adjusted third-quarter operating profit was $124 million. Segment operating profit declined to $124 million from $153 million. On a constant currency basis, third-quarter Revenue per available room, or RevPAR decline was 15.2%.
Revenue from Americas declined to $206 million from $253 million, while operating profit dropped to $82 million from $129 million. RevPAR declined 15.5% in the third quarter with US RevPAR falling 15.7% reflecting a tough trading environment in New York.
EMEA generated $101 million in third-quarter revenues, down from last year's $137 million. The segment's operating profit dropped to $36 million from $46 million reported in the corresponding period last year. RevPAR declined 15.2% in the third quarter driven primarily by rate.
Operator of the InterContinental and Holiday Inn brands said third-quarter Asia Pacific revenues slumped to $62 million from $73 million, and operating profit edged down to $17 million from $18 million. RevPAR declined 13.4%, driven entirely by rate. Occupancy improved 1.3 percentage points.
Further, the company said that global constant currency RevPAR decline was 13.5% in October with Americas showing a decline of 14.5%, EMEA a drop of 12.7% and Asia Pacific witnessing a decrease of 9.9%. The company attributed the declines to weaker comparables.
The company noted that 11,386 net rooms were added in the quarter, increasing total system size to 641,086 rooms.
In August, the company reported a second-quarter loss attributable to the equity holders of the parent of $56 million or 19.2 cents per share, compared to a profit of $101 million or 34.1 cents per share last year. Pre-tax loss was $82 million, compared to profit of $145 million a year ago. Total second-quarter revenues dropped 27.2% to $375 million from $515 million reported last year.
Among others in the industry, Marriott International Inc. (MAR) posted a loss in the third-quarter, as the company recorded hefty charges related to the timeshare segment. The company's third-quarter net loss from continuing operations attributable to Marriott was $466 million or $1.31 per share, compared to a profit of $94 million or $0.25 per share in the year-ago quarter. Quarterly revenues totaled $2.47 billion, down from the previous year's $2.96 billion.
For the first three quarters of the fiscal, InterContinental Hotels said its profit attributable to equity holders of the parent slumped to $38 million from $254 million. Earnings declined to 12.9 pence per share from 86.1 pence per share reported last year. Revenue dropped to $1.127 billion from $1.470 billion in the previous year.
Commenting on the results, Andrew Cosslett, Chief Executive of InterContinental Hotels, said, "The trading environment remains challenging. We see signs of occupancy stabilising, but rate is still under considerable pressure across the board. Our signings pace remains impacted by the continued scarcity of financing for hotel developments.''
Looking ahead, the company said it remains on track to achieve savings in regional and central costs of around $80 million in full-year 2009, of which at least $40 million would be sustainable savings.
IHG.L is currently trading at 862.00 pence, up 19.50 pence or 2.31%, on 195,609 shares.
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