(Alliance News) - InterContinental Hotels Group on Tuesday said trading improved significantly during the first half of 2021, as travel demand returning strongly as vaccines were roll out, restrictions eased and economic activity began to rebuild.
For the six months to June 30, total revenue was USD1.18 billion, down 6% from USD1.25 billion a year before, but IHG swung to an operating profit of USD138 million from a loss of USD233 million.
Revenue per available room - a key metric in the hotel industry - was 20% higher than at the same time in 2020.
IHG noted the Covid-19 pandemic continued to hurt its financial performance through the first half, as government travel restrictions introduced in 2020 were maintained in most markets to varying degrees.
As a result, IHG did not declare an interim dividend, but was confident the resumption of dividend payments would resume in "due course".
"It has been great to see our teams welcome more and more guests back into our hotels, with domestic leisure bookings leading the way, particularly in the US and China," said Chief Executive Officer Keith Barr.
"Essential business travel was a key element of our resilience throughout the pandemic, and we are now seeing more group activity and corporate bookings start to come back."
Barr added: "These trends and the momentum in the business have continued in recent weeks, including in EMEAA where a lifting of travel restrictions in some markets is also now driving improvements in demand. With occupancy and rate continuing to improve, nearly 50% of our hotels achieved RevPAR above 2019 levels in July."
IHG shares were down 0.4% early Tuesday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.1% at 7,139.85
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Hang Seng: up 1.0% at 26,553.90
Nikkei 225: closed up 0.2% at 27,888.15
DJIA: closed down 106.66 points, 0.3%, at 35,101.85
S&P 500: closed down 0.1% at 4,432.35
Nasdaq Composite: closed up 0.2% at 14,860.18
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EUR: soft at USD1.1743 (USD1.1748)
GBP: down at USD1.3847 (USD1.3856)
USD: up at JPY110.35 (JPY110.24)
Gold: up at USD1,735.85 per ounce (USD1,730.32)
Oil (Brent): up at USD69.83 a barrel (USD68.80)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
1100 CEST Germany ZEW indicator of economic sentiment
0830 EDT US preliminary productivity & costs
0855 EDT US Johnson Redbook retail sales index
1630 EDT US API weekly statistical bulletin
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UK retail sales growth slowed in July, with poor weather partially offsetting an easing in lockdown measures and as the sector tracks tougher comparatives. It was around July 2020 that UK retailers began to fully re-emerge from the first Covid-19 lockdown in the UK. In 2021, all legal Covid-19 restrictions in England ended on July 19, in what was dubbed 'freedom day'. According to the latest British Retail Consortium-KPMG sales monitor, total UK retail sales rose 6.4% annually in July, following growth of 3.2% a year earlier. Though still fairly sizeable, July's growth was below the three-month average of 15%. Compared to two years earlier, so prior to the pandemic, total UK retail sales were 9.1% higher. On a like-for-like basis, sales were 4.7% higher year-on-year in July.
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Used car sales in the UK more than doubled in the second quarter of 2021, as the lifting of lockdown and shortages of new vehicles drove demand. There were 2.2 million used car transactions, up from 1.0 million a year ago, the Society of Motor Manufacturers & Traders said. While the 2020 figure was particularly weak as it came in the UK's first lockdown, this year's number is a record for second-quarter sales. It means first-half sales are up by a third from a year ago, to 3.9 million from 2.9 million. But this remains down 4.9% from the 4.1 million transactions in the first half of 2019. Sales of used battery-electric and plug-in hybrid vehicles more than tripled, but still only made up 1.3% of the total market.
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BROKER RATING CHANGES
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PEEL HUNT RAISES PHOENIX GROUP TO 'HOLD' ('REDUCE') - TARGET 690 (605) PENCE
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HSBC CUTS MEGGITT TO 'HOLD' ('BUY') - TARGET 747 (580) PENCE
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COMPANIES - FTSE 100
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abrdn, the Edinburgh-based investment and asset manager formerly known as Standard Life Aberdeen, reported a swing to pretax profit of GBP113 million in the first half of 2021 from a GBP498 million loss a year ago, amid higher adjusted operating profit and lower impairments. Otherwise, things were mostly steady. abrdn kept its interim dividend unchanged at 7.3 pence per share and maintained its previous guidance. Assets under management and administration was mostly unchanged at GBP532 billion, compared to GBP535 billion a year ago, as net outflows were staunched, reduced to GBP5.6 billion from GBP24.8 billion.
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Flutter Entertainment said it enjoyed a very strong first half with revenue growth driven by increased average monthly players. For the six months to June 30, revenue was up 99% at GBP3.05 billion from GBP1.54 billion in the prior year and pretax profit more than tripled to GBP77 million from GBP24 million. Adjusted earnings before interest, tax, depreciation and amortisation - excluding the US business - doubled to GBP684 million from GBP339 million. Flutter did not declare an interim dividend but said its payout policy was to be kept under review. Looking ahead, Flutter expects second half adjusted Ebitda of between GBP1.27 billion to GBP1.37 billion. CEO Peter Jackson said: "The first half of 2021 exceeded our expectations as we made substantial progress against our operational and strategic objectives while maintaining excellent momentum in growing our player base. Our global sports businesses benefited from further enhancements to our products and the return to more normalised sporting calendars while we sustained our strong performance in gaming despite the challenging comparatives set last year."
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A review of Rio Tinto's Oyu Tolgoi project found that geological issues were not the cause of delays and cost overruns, as the Anglo-Australian miner initially claimed, the Financial Times reported. The independent report - peer reviewed by two leading mining engineers - found that ground conditions were not a major factor behind delays and overspending in the USD6.75 billion expansion of the Oyu Tolgoi copper project in Mongolia, according to the newspaper. In July 2019, Rio Tinto had announced delays of 16 to 30 months and additional costs of USD1.2 billion to USD1.9 billion at the massive copper mine.
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COMPANIES - FTSE 250
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Philip Morris International said it has switched its Vectura Group bid to a takeover offer from a scheme of arrangement. The US tobacco firm said the move "increases certainty of execution". Philip Morris said the switch to Vectura takeover offer has consent of UK Takeover Panel and the offer was conditional on more than 50% acceptances. Philip Morris added that no other changes to the Vectura takeover offer were made ahead of panel-set auction against private equity firm Carlyle Group. This will start on Wednesday and run for five days, ending on Tuesday next week.
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COMPANIES - MAIN MARKET AND AIM
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River & Mercantile confirmed a Sky News report that it is in discussions over the sale of its fiduciary division, known as Solutions. The advisory and asset management firm said it has received "a number of approaches from external parties expressing interest in acquiring its Solutions business". Therefore, it has appointed Fenchurch Advisory Partners and Lazard & Co to advise the board. River & Mercantile said talks are at an early stage, and there is no assurance that a deal will be struck.
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COMPANIES - GLOBAL
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Mitsubishi Electric said it will acquire Glasgow-based Smarter Grid Solutions, a University of Strathclyde spin out company that provides software connecting renewable energy to the electricity grid, for an undisclosed sum. The acquisition is expected to be finalised in the next few weeks, after which SGS will remain based in Glasgow under the Tokyo-based electronics firm's subsidiary Mitsubishi Electric Power Products.
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Tuesday's Shareholder Meetings
Georgia Capital PLC - AGM
SDCL Energy Efficiency Income Trust PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
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