Accor Sa · EURONEXT:AC
Accor Sa — FY2012 Earnings Presentation
53 slides from Accor Sa's earnings presentation, Feb 20, 2013
Slide 1: 2012 Results
2012 RESULTS February 20, 2013
Slide 2: Denis Hennequin, Chairman and CEO
DENIS HENNEQUIN Chairman and Chief Executive Officer 2 Accor Results - February 20, 2013
Slide 3: 2012 Takeaways
2012 Takeaways €526m EBIT 90% at December-end 2012 ibis megabrand hotels EBIT target achieved rebranded To-date more than 1,500 hotels with new signs & beds 38,085 Rooms opened in 2012 with key acquisitions Another Record Year €1,935m total impact of disposals €796m Motel 6 sale’s €1,139m Asset Mana
Slide 4: 2012 milestones: ibis megabrand fast roll out
2012 milestones ibis megabrand: a fast roll out ► 2012: Record openings for the ibis family without acquisitions ► A unique and dedicated website www.ibis.com and Smartphone’s app ► Steady improvement in bed comfort’s satisfaction over the last 6 months for both business and leisure clients A reinfo
Slide 5: 2012 milestones: Accor distribution
2012 milestones All-time high for Accor’s distribution of rooms sold through Accor’s central system, 50% representing €4.3bn(1), up 21% vs. 2011 of total room sales through Internet in 2012 €2.4bn ► 59% through Accor’s websites ► 41% through third-parties websites 10.1m members all around the world,
Slide 6: 2012 milestones: new record for expansion
2012 milestones New Record for Expansion Record 38,085 rooms openings (266 hotels) Novotel London Blackfriars, UK 85% ► 85% asset light Pullman Wuxi New Lake, China 72% ► 72% in Emerging markets ibis Styles Nîmes Gare, France o/w 48% in Asia Pacific alone ibis Hua Hin, Thailand ibis budget 40% ► 40%
Slide 7: 2012 milestones: Asset Management plan
2012 milestones Continued roll out of the Asset Management plan 228 hotels restructured over 2011-2012 including more than 65% through Sale & Management Back or Sale & Franchise Back agreements Pullman Paris Rive Novotel New York Times Square, Motel 6 Mississippi, Gauche, France United States United
Slide 8: 2012 Results, Sophie Stabile, CFO
2012 RESULTS SOPHIE STABILE – Global Chief Financial Officer 8 Accor Results - February 20, 2013
Slide 9: Disposal of Motel 6: a transforming sale
Disposal of Motel 6: A transforming sale improving the Group’s profile Impact of Motel 2011 In € millions 2011 6 disposal Restated Revenues 6,100 (532) 5,568 Rents (995) (92) (903) EBIT 530 (15) 515 EBIT margin 8.7% +50 bps 9.3% PBT 438 (10) 428 ROCE 12.3% +160 bps 13.9% Adj. FFO / Adj. Net Debt (1)
Slide 10: FY 2012 Revenue: €5,649m
FY 2012 Revenue: €5,649m P&L Cash Flow Total Group Performance 2011(1) 2012 ► Reported revenue of owned & leased hotels stable, €5,568m €5,649m up 1.5% +2.7% Like-for-Like ► 16.5% increase in Management & Franchise fees +€152m 68.7 511 +2.8% Expansion In € million Organic +€154m 14.3 growth 12.3 Cur
Slide 11: Stable EBITDAR margin
Stable EBITDAR margin P&L Cash Flow Total Group Performance 2011 2012 €1,759m €1,788m 31.6% 31.7% -0.3pt Like-for-Like +€33m ► Globally steady business trading levels -0.3pt Expansion ► Positive impact of disposals on EBITDAR margin with +€33m operations on low-margin assets +0.6pt Disposals ► EBITD
Slide 12: Up & Midscale
Up & Midscale P&L Cash Flow Performance % change In € millions 2011 2012 % change L/L(1) Revenue 3,488 3,536 +1.4% +2.7% EBITDAR 1,008 1,018 +1.0% +1.1% EBITDAR margin 28.9% 28.8% -0.1pt -0.5pt EBIT 229 234 +2.3% +2.4% EBIT margin 6.6% 6.6% +0.1pt -0.0pt (1) Like-for-like, i.e. excluding changes in
Slide 13: Economy
Economy P&L Cash Flow Performance % change In € millions 2011 2012 % change L/L(1) Revenue 1,896 1,960 +3.4% +2.6% EBITDAR 723 756 +4.6% +2.5% EBITDAR margin 38.1% 38.6% +0.4pt -0.0pt EBIT 272 277 +1.9% +1.7% EBIT margin 14.3% 14.1% -0.2pt -0.1pt (1) Like-for-like, i.e. excluding changes in scope of
Slide 14: Continuous increase in EBIT, up 3% L/L
Continuous increase in EBIT, up 3% L/L P&L Cash Flow Performance % change In € millions 2011 2012 % change L/L(1) EBITDAR 1,759 1,788 +1.7% +1.9% Rents (903) (938) -3.9% -2.2% Depreciation & amortization (341) (324) +4.6% +0.6% EBIT 515 526 +2.0% +3.0% EBIT margin 9.3% 9.3% +0.1pt +0.0pt (1) Like-fo
Slide 15: EBIT: split by business
EBIT: split by business P&L Cash Flow Performance EBIT Change vs. 2011 EBIT margin (in €m) (in €m) Management & Franchise (1) 350 +33 52.6% Sales & Marketing Fund (1) 1 +2 NA Owned & Leased 229 (12) 4.6% Central costs, Other Businesses & Intercos (54) (11) NA Total 526 +11 9.3% (1) Including fees fr
Slide 16: Operating PBT up 9% at €468m
Operating PBT up 9% at €468m P&L Cash Flow Performance In € millions 2011 2012 EBIT 515 526 Net financial expense (92) (75) Share of profits/(losses) of associates 5 17 Operating profit before tax and non-recurring items 428 468 Non-recurring items 9 (229) Income tax expense (166) (143) Minority int
Slide 17: Positive recurring free cash flow at €150m
Positive recurring free cash flow at €150m P&L Cash Flow Performance In € millions 2011 2012 Funds from operations 670 694 Renovation & maintenance capex (268) (299) Recurring expansion capex (203) (245) Recurring free cash flow 199 150 Capex in line with targets including €39m linked to ibis megabr
Slide 18: Strategic acquisitions weighing on Net Debt
Strategic acquisitions weighing on Net Debt P&L Cash Flow Performance In € millions 2011 2012 Recurring free cash flow 199 150 Acquisitions & ibis megabrand(1) (92) (468) Proceeds from disposals(2) 773 620 Dividends (155) (269) Capital increase, net 11 3 Others (232) (231) (Increase) / Decrease in n
Slide 19: Key acquisitions: leadership in Australia and Brazil
Key acquisitions leading to undisputed leadership in Australia and Brazil P&L Cash Flow Performance €193m Mirvac ► Portfolio of 43 hotels with the majority in Australia and a strong presence on the Up & Midscale segment ► Mirvac Wholesale fund successfully refinanced in July through a strong partner
Slide 20: Asset Management Program: 2011-2012 plan achieved
Asset Management Program: 2011-2012 plan achieved P&L Cash Flow Performance 2011 2012 completed completed Total Sales & Variable Lease Back 13 9 22 Sales & Management Back 9 10 19 Sales & Franchise Back 69 60 129 Outright Sales 38 + 20 = 58 Total hotels 129 99 228 Cash Impact €394m €352m €746m Impac
Slide 21: Asset Management: 2012 impacts
Asset Management: 2012 impacts P&L Cash Flow Of owned Of leased Performance hotels(1) hotels(1) Number of hotels 68 31 Revenue 146 82 EBITDAR 32 17 (2) (23) Rents (18) (2) D&A EBIT 12 (8) 8.2% (10.7)% EBIT margin Proceeds 386 22 Cash Out N/A (57) €352m Impact on Adjusted Net Debt €424m €182m €606m S
Slide 22: Credit ratios: in line with investment grade status
Credit ratios: in line with the investment grade status P&L Cash Flow Performance In € millions 2011 2012 Gross debt 1,717 2,381 Current financial assets (1,491) (1,960) Net debt 226 421 Adjusted Funds from operations / Adjusted net debt(1) 26.0% 28.5% (1) Net debt adjusted for NPV of minimum lease
Slide 23: Strong optimization of the financial structure
Strong optimization of the financial structure P&L Cash Flow Performance Change in Average cost of Financial result Average cost of (prorata temporis, in €m) debt to be refinancing refinanced 2013 2014 €700m in 2013 6.14% 2.88% 13 23 €400m in 2014 7.50% (0.64)%* - 23 TOTAL 13 46 * Average interest i
Slide 24: ROCE up +0.1pt at 14%
ROCE up +0.1pt at 14% P&L Cash Flow Performance 2011 2012 Capital Capital In € millions employed ROCE employed ROCE Upscale & Midscale 4,138 11.1% 4,142 11.4% Economy 1,987 19.5% 2,050 19.5% Total Group 6,322 13.9% 6,355 14.0% +0.1pt Strong ROCE on the Economy segment Improvement in Up & Mid thanks
Slide 25: Proposed dividend for 2012
Proposed dividend for 2012 P&L Cash Flow Performance 2012 Operating profit before non-recurring items, net of tax(1) (in € millions) 345 Operating profit before non-recurring items, net of tax per share (in €) 1.52 (2) Ordinary Dividend per share (50% payout ratio) (in €) 0.76 Ordinary Dividend (in
Slide 26: Strategy
STRATEGY DENIS HENNEQUIN - Chairman and Chief Executive Officer 26 Accor Results - February 20, 2013
Slide 27: Our ambition
Our ambition 550K rooms 40/40/20 80% asset-light Strengthen leadership 50% of EBIT coming in Emerging markets from Emerging markets Reshape our European portfolio Enhance Accor unique Expertise 450K rooms 57% asset-light 23% of EBIT coming from emerging markets 27 Accor Results - February 20, 2013
Slide 28: Five pillars to reach the new target
Five pillars to reach the new target 1. A reinforced brand and distribution system 1. Brands & 2. Expansion 2. An aggressive development plan Distribution 3. An ambitious asset 3. Asset 4. Streamlined management plan for Owned and Leased hotels Management Organization 4. An organization to be aligne
Slide 29: A complete and complementary brand portfolio
A complete and complementary brand portfolio 1. Brands & Distribution Relevant brands to address all markets needs 29 Accor Results - February 20, 2013
Slide 30: Strong Brands: genuine virtuous circles
Strong Brands: genuine virtuous circles 1. Brands & Distribution Turn clients into brand Strong Brands prescriptors RevPAR index Reinvestment CUSTOMER in Marketing OWNER Generate CENTRIC & Distribution CENTRIC loyalty Attract new Faster customers asset-light expansion Meet customers Improved needs &
Slide 31: A new approach to distribution
A new approach to distribution 1. Brands & Distribution 50% of online bookings by the end of 2016 Customer Web Relation c. €30m/year to be spent over 2013-2016 31 Accor Results - February 20, 2013
Slide 32: Accor Customer Relation: a key digital relation
Accor Customer A key digital relation Relation for future hospitality 1. Brands & Distribution 28 millions clients on data base +2 millions new members each year in our Loyalty program +3 pts on average occupancy rate New digital services Self e-Check- Digital key Touchpad Desk check-in/out in/out ►
Slide 33: A unique concept: Accor Store
A unique concept ACCOR STORE to be visible and preferred 1. Brands & Distribution Accorhotels.com the “brands store” The power of one distributor 30 digital “stores” across the world The “brand boutiques” Personalization and attractiveness 20 digital “boutiques” across the world ►Modernized websites
Slide 34: A strong and ambitious development plan
A strong and ambitious development plan 2. Expansion ► 30,000 rooms to be added organically every year ► Opportunistic acquisitions to strengthen leadership in emerging markets (c. 5,000 rooms per year) ► More than 85% asset-light ► 80% of Expansion Capex for Owned & Leased openings mostly Economy h
Slide 35: A strong asset-light pipeline
A strong asset-light pipeline 2. Expansion 633 hotels (112,600 rooms) ► Projects in pipeline at December-end 2012 by region and by detention mode, in % of total rooms Owned & Europe 23% Leased 16% Management 64% Franchise Asia 14% Pacific 52% Management Latin 17% 8% America 70% Africa Middle East 77
Slide 36: Asset Management: focused on European countries
Asset Management: focused on European countries 3. Asset Management c. 800 hotels to be restructured by the end of 2016 Europe 83% 9% Asia Pacific Latin 2% 6% America Africa Middle East 56% of the current owned & leased hotels to be restructured 36 Accor Results - February 20, 2013
Slide 37: A new organization
A new organization 4. Streamlined Organization Operations Department Property Management Department Finance HR ► Manage asset portfolio ► Enhance operations excellence ► Accelerate the asset management ► Raise brands awareness Legal plan ► Develop Accor’s distribution ► Optimize capex allocation Com
Slide 38: Dedicated KPIs for each department
Dedicated KPIs for each department 4. Streamlined Organization Operations Department Property Management Department ►RevPAR index ►EBIT margin ►EBITDAR margin ►CAPEX ►Flow Through ►ROCE optimization ►Expansion plan ►Net Asset Value A strong Free Cash Flow generation A Group reorganized around specif
Slide 39: Operational Excellence to support the strategy
Operational Excellence to support the strategy 5. Operational Excellence Operational Excellence and improved cost management ► OTAs & new entrants reshuffle distribution issues ► Structural increase in operating costs (tax, energy) ► Continued deterioration in Southern Europe Savings plan: €100m bet
Slide 40: Financial framework of the transformation
FINANCIAL FRAMEWORK OF THE TRANSFORMATION SOPHIE STABILE – Global Chief Financial Officer 40 Accor Results - February 20, 2013
Slide 41: Cost adjustments to master industry changes
Cost adjustments to master industry changes Increase in tax and energy costs OTAs & new entrants reshuffle distribution issues c. €30m per year €100m savings plan to be spent for Distribution between 2013 & 2014 ► To raise brand awareness ► Strategic review and ► To grow online bookings to 50% prior
Slide 42: Fast asset-light expansion to leverage margin
Fast asset-light expansion to leverage margin Asset-Light Owned & Expansion Leased Annual impacts(€m) at cruise speed Revenue 175-225 EBITDAR 60-80 EBIT 30-40 EBIT Margin c.17% €100-150m yearly expansion capex by 2016 Profitable expansion to drive margin growth 42 Accor Results - February 20, 2013
Slide 43: About 800 hotels to be restructured by 2016
About 800 hotels to be restructured by the end of 2016 3. Asset Management Asset Management New Plan (in number of hotels) 2013 - 2016 Conversions into Variable Lease contracts c.25 Conversions into Management contracts c.125 Conversions into Franchise contracts c.600 Outright Sales or Termination o
Slide 44: Asset Management of Leased hotels
Asset Management of Leased hotels: c. 600 leased hotels to be restructured 3. Asset Management P&L Contribution(1) Leased Hotels (€m) Revenue 1,500 ►34% of existing room portfolio (12% of fix-leased and 22% of variable) EBITDAR 350 ►54% of leased hotels to be restructured ►Mostly unit by unit agreem
Slide 45: Asset Management of Owned hotels
Asset Management of Owned hotels: Extended disposal plan of 200 hotels 3. Asset Management P&L Contribution(1) Owned hotels (€m) ►9% of existing room portfolio Revenue 500 EBITDAR 100 ► 2/3 of owned hotels to be restructured Rents (3) D&A (70) EBIT 27 €1.3bn Positive impact on Adj. Net Debt EBIT Mar
Slide 46: Accor by 2016: a new financial profile
1. Brands & Accor by 2016: a new financial profile Distribution 2. Expansion 3. Asset 4. Streamlined Management Organization 5. Operational Excellence Increased EBIT margin >15% Reduced annual capex(1) €300-400m Improved ROCE >18% Reduced volatility of profits(2) -50% A reinforced financial strategy
Slide 47: A strong financial capacity
A strong financial capacity Net cash proceeds from Cash Flow from operations Asset Management Cash utilization in line with investment grade status Asset light Return acquisitions to shareholders ► Asset light acquisitions ► Pay out ratio = 50% with ROCE >12% ► Special return (cash or share buy-back
Slide 48: Conclusion
CONCLUSION DENIS HENNEQUIN - Chairman and Chief Executive Officer 48 Accor Results - February 20, 2013
Slide 49: Our Vision for 2016
Our Vision for 2016 Be the Global Reference in the Hospitality Industry Shape the future of hospitality through our conquering and caring values Build strong relationship with customers and owners Leverage the attractiveness of our brands Empower our distribution systems Create shareholder value 49
Slide 50: Appendices
APPENDICES 50 Accor Results - February 20, 2013
Slide 51: 2013 Trends
2013 Trends Up & Midscale Economy Worldwide Worldwide L/L – excl. VAT O&L Nov. Dec. Jan. Nov. Dec. Jan. OR (pts) +0.3 +0.6 +0.4 -0.5 -1.0 -0.6 ARR (%) -1.4 +0.7 +1.1 +1.4 +1.6 +1.0 RevPAR (%) -1.0 +1.8 +1.9 +0.6 -0.1 -0.1 51 Accor Results - February 20, 2013
Slide 52: FY 2012 EBIT margins by detention mode and segment
FY 2012 EBIT margins by detention mode and segment EBIT margin Owned Fixed lease Var. lease Up & Midscale 5.6% (1.2)% 3.3% Economy 13.1% 6.1% 8.2% 2012 8.0% 1.2% 5.3% 52 Accor Results - February 20, 2013
Slide 53: P&L Performance: a powerful tool to drive Asset Management
“P&L Performance”: A powerful tool to drive the Asset Management strategy Central Costs 2012 Management & Sales & Marketing Owned & Leased Other Businesses Total Franchise (1) Fund (1) & Intercos Gross Revenue 11,095 N/A 4,943 152 11,247 o/w Revenue(1) 665 339 4,943 (298) 5,649 EBITDAR 350 1 1,437 0