Shares in InterContinental Hotels Group (LON:IHG) have lost ground in London this morning even as the company delivered a rise in revenues and profits for the year ended December 31. The Holiday Inn and Crowne Plaza owner, however, warned that it was not planning additional capital return for the current year as it unveiled new initiatives to drive growth.
As of 09:38 GMT, InterContinental’s share price had given up 5.05 percent to 4,460.00p. The group’s stock and heavyweight HSBC (LON:HSBA) are weighing on the benchmark FTSE 100 index which currently stands 0.19 percent in the red at 7,233.56 points.
InterContinental posts results
InterContinental reported today that its underlying revenue had climbed five percent to $1.6 billion last year, while the group’s underlying operating profit came in eight percent higher at $759 million. The Holiday Inn and Crowne Plaza owner’s revenue per available room meanwhile rose 2.7 percent during the reported period.
“We delivered a strong performance in 2017,” the group’s chief executive Keith Barr commented in the statement, noting that the company was “undertaking a comprehensive efficiency programme,” targeting about $125 million in annual savings for reinvestment to drive growth.
InterContinental, however, warned that the new initiatives would result in $200 million exceptional cash costs to achieve the savings, and cautioned that given the investment to drive growth, no additional capital return will be paid in calendar year 2018.
Liberum weighs in on initiatives
Proactive Investors quoted analysts at Liberum as commenting that the main focus would be on InterContinental’s new initiatives “with changes to divisional structures (Europe folds into AMEA), segmentation moves back to more simplified Mainstream, Upscale and Luxury”.
“We believe these new initiatives will likely take time to digest with exceptional cash cost of $200m in achieve the efficiencies weighing on cashflows in the near term,” the analysts pointed out.