Highlights from Scandic’s Interim Report Q2 2022.
Second quarter in summary
- Net sales rose by 221.8 per cent to 5,276 million SEK (1,640).
- The average occupancy rate rose to 63.2 per cent compared with 27.1 per cent during the second quarter of the previous year.
- Average revenue per available room (RevPAR) increased to 749 SEK (245) driven by higher occupancy and positive price development.
- Adjusted EBITDA totaled 1,083 million SEK (-364). The company’s results were positively impacted by state aid of 94 million SEK (203), and 167 million SEK attributable to temporary effects from agreements with the Norwegian state regarding housing for refugees from Ukraine and compensation received in connection with the opening of hotels.
- Excluding IFRS 16, earnings per share totalled 2.44 SEK (-3.08).
- Free cash flow totalled 1,300 million SEK (-214).
- Agreement signed for a new 305-room hotel in Tromsø, Norway, which is expected to open in 2025, as well as an agreement to take over a 132-room hotel in Horsens, Denmark from October 1, 2022.
- During the quarter, Scandic opened six hotels and exited two hotels. In total, the number of rooms in operation increased by 1,570.
- Agreement signed with landlord Pandox to extend lease agreements for 15 hotels with a total of 3,598 rooms. In total, 23 agreements were extended during the quarter.
First six months in summary
- Net sales rose by 211.7 per cent to 8,009 million SEK (2,569).
- Adjusted EBITDA totaled 846 million SEK (-1,138).
- Excluding IFRS 16, earnings per share amounted to 0.09 SEK (-7.98).
- Free cash flow was 304 million SEK (-1,194).
CEO comments in summary
“As we announced earlier, Scandic’s second quarter was a very strong quarter. Both net sales and adjusted EBITDA reached their highest levels ever, while indebtedness dropped sharply as a result of strong cash flow.
“Adjusted EBITDA reached 1,083 million SEK and although the company’s results were impacted positively by non-recurring items of 261 million SEK, underlying profitability was at a historically high level with an operating margin of more than 15 per cent. This can be explained by the strong hotel market combined with high efficiency and cost control.
“The hotel markets picked up in connection with the lifting of restrictions at the start of the year and development was driven by strong underlying demand in all markets. Above all, I’d like to highlight the positive development in the important metropolitan regions where activity levels have returned.
“Our occupancy rate rose from 39 per cent in Q1 to 63 per cent in Q2 and we have seen continued clear increases in room rates in all markets. Scandic’s RevPAR (average revenue per available room) returned to the same level as in the corresponding quarter of 2019, which was a record year for the company.
“In the past months, we extended 23 leases with terms that will enable good profitability and a balanced risk for Scandic. In June, we signed an agreement with our biggest landlord, Pandox, to extend leases with unchanged rental terms for 15 hotels that together include 3,600 rooms. As part of the agreement, the parties also agreed on a joint renovation program for the hotels. Among other things, Pandox will make investments in ventilation and heat recovery in most of the hotels, which will reduce energy consumption and lower operating costs in the future.
“During the quarter, we also strengthened Scandic’s offering with a number of attractive new hotels. Two new hotels opened in Copenhagen and three in the Swedish market in Gothenburg, Helsingborg and Kiruna. In addition, we successfully reopened Scandic Holmenkollen Park outside of Oslo after an extensive renovation and expansion. Several of these openings were initially scheduled to take place earlier, but of course, we are pleased that we were able to open them when the hotel market is so strong.
“Based on the current booking situation, we expect a continued strong hotel market in the coming months. We are running our operations more efficiently and are highly prepared to deal with future challenges such as inflation and a potential weakening of the economy. All in all, this provides good conditions for continued good profitability and strong cash flow.
“Naturally, we are extremely pleased with our record profit this quarter and I would like to thank all of Scandic’s team members who have made this possible. We look forward to a strong third quarter,” says Jens Mathiesen, President & CEO, Scandic Hotels Group.
View the full report.