Third quarter in summary
- Net sales decreased by 60 percent to 2,085 MSEK (5,195).
- Occupancy was 36 percent, (75.5) less than half of what it was during Q3 2019.
- Adjusted EBITDA was 90 MSEK (823). The decrease in earnings was mitigated by direct government support of 371 MSEK as well as low operating costs.
- Excluding the effects of IFRS 16 and items affecting comparability, earnings per share amounted to -0.77 SEK (4.28).
- Items affecting comparability amounted to -70 MSEK, related to staff reductions in Norway and Denmark.
- At the end of the quarter, Scandic's available liquidity amounted to around 3.2 BSEK including credit commitments.
- On September 28, Scandic announced it was strengthening its commercial organization by recruiting Anna Spjuth as Chief Commercial Officer.
The period January-September in Summary
- Net sales fell by 57 percent to 6,093 MSEK (14,114) and adjusted EBITDA was -1,221 MSEK (1,542).
- Adjusted for the effects of IFRS 16 and items affecting comparability, earnings per share amounted to -37.78 SEK (5.65) with a negative material impact from the impairment of intangible assets that was carried out during the first quarter.
Events after the reporting date
- Agreement signed to take over a 150-room hotel by Stockholm Arlanda Airport with revenue-based rent.
- Scandic intensify negotiations with the landlords regarding rents and will therefore reduce rent payments until new agreements have been reached.
CEO's comments in summary: Scandic's adjusted EBITDA improved compared with the previous quarter, increasing to a slight positive result, supported by low operating costs and government support. Occupancy was 36 percent, only half of what was normal earlier and below what is needed for sustained profitability.
Since many people opted to spend their vacations in their home countries, a number of hotels at holiday destinations experienced high occupancy during the summer. The level of activity in all Nordic capital cities, however, was extremely low. From the end of August, demand has been driven mainly by domestic corporate customers outside the big cities on weekdays combined with leisure travelers on the weekends.
The coronavirus crisis will have a long-term impact on the hotel industry, and it will be several years before occupancy returns to the level prior to the pandemic. Our leases must therefore ensure profitability at lower occupancy levels and provide a balanced risk sharing during periods of low demand. Today, some hotels, especially in the big cities, have rent costs that exceeds their revenues, which is unreasonable. We are now intensifying negotiations with our landlords and will therefore reduce rent payments until new terms have been reached.
Scandic recently signed an agreement to take over a modern hotel at Arlanda Airport in Stockholm with a variable rent that provides a balanced risk distribution between us and the landlord. I'm certain we will see more agreements with a similar structure going forward.
Scandic has recently introduced a number of commercial initiatives including the launch of a coworking concept, a student housing offering and improved terms and conditions for loyalty members. In addition, we have recently strengthened our commercial organization through the recruitment of Anna Spjuth as Chief Commercial Officer at Scandic.
In October, our occupancy rate was roughly in line with September and amounted to 33 percent. Demand is currently negatively affected by increased spread of the coronavirus combined with stricter government restrictions in our markets. Based on current booking rate, occupancy in November is expected to be lower than in October.
As the clear market leader with a strong, proven operational and commercial model and a leading customer offering, I'm convinced that Scandic will continue to be the best long-term partner for hotel property owners in the Nordic region.
Jens Mathiesen President & CEO
This information is information that Scandic Hotels Group AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out below, at 07.30 CET on November 3, 2020.
Report presentation November 3, 2020 at 09.00 CET
A presentation of the report will take place at 09.00 CET today, November 3. Scandic's President & CEO Jens Mathiesen will present the report together with CFO Jan Johansson in a webcast and telephone conference.
Details for participation by telephone: +46850558368, UK: +443333009031.
Please call in 5 minutes before the start. The presentation will be held in English.
You can view the webcast at www.scandichotelsgroup.com. The interim report and presentation slides will also be available on the website.
Please join us to listen and ask questions.
Click here to view the full report.
About Scandic Hotels Group
Scandic is the largest hotel company in the Nordic countries with more than 280 hotels, in operation and under development, in more than 130 destinations. The company is the leader when it comes to integrating sustainability in all operations and its award-winning Design for All concept ensures that Scandic hotels are accessible to everyone. Well loved by guests and employees, the Scandic Friends loyalty program is the largest in the Nordic hotel industry and the company is one of the most attractive employers in the region. Scandic Hotels is listed on Nasdaq Stockholm. www.scandichotelsgroup.com