NH Hoteles Announces A Capital Increase To Strengthen Its Balance Sheet
- The capital increase will involve issuing two new shares for every three old ones
- All the shareholders represented on the Board of Directors have stated their intention to subscribe to the capital increase and even, in some cases, to step up their holding
- The global slowdown in the hotel industry at the end of 2008 has continued in the first quarter of 2009 and sales reached €276M
- The measures set in motion by NH Hoteles to minimise the impact of the global economic slowdown have led to a €28.3M drop in operating expenses in three months
- Revenues from the real estate activity grew by 49% to €6.2M, as homes and premises in a development in Sotogrande were delivered to buyers
- NH Hoteles' commitment to continuous sustainability means that there has been a further major reduction in energy and water consumption, CO2 emissions and waste production in the Group
Yesterday all the shareholders represented on the Board of Directors said that they are going to take part in the capital increase and some of them even stated that they intend to increase their holdings if possible. The capital increase will mean that the Group will gain in financial flexibility and NH Hoteles will be stronger when the economy starts to turn around. If it is approved by the Annual General Meeting, the capital increase will be made with a right of first refusal and will involve issuing 2 new shares for every 3 old ones.
The global economic uncertainty which is behind the situation which affected the hotel industry in the fourth quarter of 2008, has continued during the first three months of 2009. NH Hoteles has, in recent months, embarked upon a number of initiatives aimed at adjusting its costs, with a view to alleviating the effects of the slowdown in sales. These measures are part of a global rationalization plan that has achieved a reduction of €28.3M in expenses in the first quarter of 2009.
Furthermore, the action being taken by the Group to restructure and adapt to the current situation in all its main areas of action and development includes cancel operations that would require investment commitments, renegotiating its leases, looking into possible asset turnover operations and looking very carefully at future openings and additions. Moreover, in line with the Group's asset rationalization policy, 2 low-return contracts have been cancelled in Italy and a planned contract in South Africa has been cancelled. These measures, combined with the planned capital increase, mean that NH Hotels will be in a more flexible financial position and will strengthen its Balance Sheet, which will allow it to meet its financial commitments during the current adverse economic situation.
First quarter 2009
NH Hoteles invoiced €276M in the first quarter of this year, 14.9% less than last year; EBITDA was negative, €-5.4M, and the Company recorded net losses of €-39.2M. This period, which is traditionally the season with the lowest earnings for the business, combined with the current slowdown in the global economy, which is adversely affecting RevPAR (Revenue per available room), is the reason for the poor performance in the first quarter.
The Business Units in Germany, Central and Eastern Europe were the markets that performed the best in 2009. Sales in comparable hotels have, however, fallen back very significantly in Spain, Italy and the Netherlands.
Real Estate activity
The real estate activity of NH Hoteles Group registered sales of €6.2M, compared to €4.1M in the same period of the previous year.
The increase in sales of apartments is due to completion of construction work and delivery of the homes and premises in the Ribera del Marlin development. From the beginning of January up to 31 March deeds have been executed for homes totalling €4.6M have been, a clear sign that the property development is doing well.
As at 31 March 2009, Sotogrande had sales commitments yet to be recorded in its accounts totalling €36.3M. These relate essentially to the Ribera del Marlin development (€31M yet to be executed by buyers in deeds and €5.3M for the moorings in the Marina).