Hong Kong owner of Peninsula hotels posts weak but better-than-expected annual result, says more pain ahead in first quarter
- Company’s unaudited revenue for two months ending February 29 is down 21 per cent year on year
- Its 2019 revenue drops 5 per cent but is better than a forecast 7.1 per cent drop, while its net profit falls 59 per cent but is better than a forecast 68.4 per cent fall
The Hongkong and Shanghai Hotels, which owns and operates Peninsula hotels globally, said on Tuesday it faces an operating loss in the first quarter of 2020, as the Covid-19 outbreak brings global tourism to a grinding halt.
In an annual results filing to the Hong Kong stock exchange, made after the market close, it said the operating loss would come “despite measures to contain costs”. Its unaudited revenue for the two months ending February 29 was down by 21 per cent year on year, the company said.
“We are currently facing a very concerning situation with the outbreak of the Covid-19 coronavirus, which has had a devastating impact on the Chinese mainland and has spread around the world,” Clement Kwok, The Hongkong and Shanghai Hotels’ managing director and chief executive, said in the filing. “Amidst the downturn in business brought about by these crises, we are striving to preserve jobs as a key priority. I would like to express my appreciation for all my colleagues around the world, for their loyalty and their hard work at such a difficult time.”
As of June last year, the company employed more than 7,500 people, according to Bloomberg. It owns 10 Peninsula hotels globally – six in Asia, one in Europe and three in the United States – and is building three in London, Istanbul and Yangon. It also owns and runs commercial and residential properties in Asia, the US and Europe.
On Tuesday, the company posted weak but better-than-expected full-year results for 2019. Its revenue dropped 5 per cent to HK$5.87 billion (US$755.8 million), but was better than the 7.1 per cent drop forecast by two analysts polled by Bloomberg. Its net profit fell 59 per cent to HK$494 million, better than a forecast of a 68.4 per cent fall.
The Hongkong and Shanghai Hotels’ share price shed 24 per cent through 2019, and is down a further 16 per cent this year. Its last close, HK$7.00, sits 25.5 per cent lower than a 12-month target price of HK$9.40 set by analysts polled by Bloomberg.
