InterContinental Hotels Reports Weak Profit Despite Revenue Growth

InterContinental Hotels Group faces challenges as profits drop, despite a 6% increase in revenues. The company is optimistic, targeting 12%-15% growth in adjusted EPS amid a new $900 million share buyback program.

Date: 18-02-2025

AI Rating: 5

Profit Margins and Earnings Analysis

InterContinental Hotels Group PLC reported a decline in IFRS profit before tax, which dropped 11.2% to $897 million, a decrease from $1.01 billion the prior year. Additionally, basic earnings per share (EPS) fell by 12.2%, down to 389.6 cents from 443.8 cents the previous year. However, adjusted earnings per share saw a positive shift, rising to 432.4 cents from 375.7 cents, indicating a recovery in adjusted figures despite the overall profit decline.

Revenue Growth

Total gross revenue experienced growth of 6% compared to last year, reaching $33.4 billion. The IFRS revenue also increased by 6% to $4.92 billion from last year's $4.62 billion. The global RevPAR (Revenue Per Available Room) rose 3.0% for the year and 4.6% in the fourth quarter, reflecting improved revenue metrics within the hotel sector.

Dividends and Share Buyback Program

The Board has responded to its financial position by proposing a 10% increase in the annual dividend, with a final dividend of 114.4 cents per share, culminating in a total of 167.6 cents for the year. Furthermore, announcing a new $900 million share buyback program may positively influence the stock price by reducing the number of shares available in the market, thus potentially increasing shareholder value.

Outlook

Looking forward, the company targets compound growth in adjusted EPS of 12% to 15% annually, which is a strong outlook indicating optimism towards future performance driven by market demand and strategic positioning.

Stocks: IHG