InterContinental Hotels cheers market with special dividend
6th August 2013 13:03
by Jessica Furseth from interactive investor
reported first-half revenues ahead of expectations on Tuesday, up 2% on constant currencies to $936 million (£610 million). Shares were up over 3% by lunchtime.
In addition to increasing the interim dividend by 10%, to 23 cents, InterContinental has announced a $350 million special dividend, to be paid alongside the interim in October.
Chief executive officer Richard Solomons was pleased with the company's performance: "Our preferred brands [are] driving RevPAR (revenue per available room) growth of 3.7%, including 4% in the second quarter. Our global scale has allowed us to reinvest in the business whilst growing margins, resulting in solid underlying profit gains led by our Americas region, and strong cash flows."
As over 200 hotels have been added to the group's pipeline, Solomons added how InterContinental's broad geographic spread and fee-based model "give us confidence in the outlook, despite the ongoing challenging economic conditions in some of our markets".
Analyst view
As current trading remains in line with that seen in the first half, Panmure Gordon analysts Karl Burns, Simon French and Lindsey Kerrigan did not expect to see any material changes to the underlying consensus EBIT forecasts of $657 million. Panmure reiterated its 'hold' recommendation, as the stock now trades at a price/earnings multiple of 18.1 times for 2014.
James Hollins, analyst at Investec, retained his 'buy' recommendation and a 2,100p target price, in appreciation of the company's ongoing programme of returning cash to investors. "Supported by a healthy pipeline and strong first-half property sign-ups, [...] we are content to remain ahead of consensus following the first-half results," said Hollins.