InterContinental Hotels profit up, to return $400m to shareholders
InterContinental Hotels Group posted a jump in full-year operating profit on Tuesday as it said it will return $400m to shareholders via a special dividend and share consolidation.
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Operating profit in the year to the end of December was up 4% to $707m as global revenue per available room rose 1.8%. However, revenue declined to $1.72bn from $1.8bn.
The company said it will pay a special dividend in the second quarter of this year, as it lifted its total dividend by 11% to 94 cents a share.
Chief executive Richard Solomons said: "Our results clearly demonstrate our strong operational performance and the success of IHG's long-term strategy, which have delivered a 9.5% increase in underlying profit and a 23% increase in underlying earnings per share. Our cash generative business model underpins our decision to announce a $400m special dividend and to propose an 11% increase in the total dividend for the year.
“The fundamentals for the hospitality industry remain compelling. Despite the uncertain environment in some markets, we remain confident in the outlook for the year ahead, as well as our ability to deliver sustainable growth into the future."
Steve Clayton, fund manager for the Hargreaves Lansdown Select UK Shares fund, said the results once again prove the attractions of IHG’s hugely cash generative business model, reinforced by another year of double-digit dividend growth and a $400m special dividend on top.
"Few stocks offer the same combination of capital-lite growth potential and the ability to keep throwing cash back to investors. Hotels are a cyclical sector, but IHG’s managed/franchised operating model smooths out a lot of the volatility, keeping its cash generation qualities intact."