(BFM Bourse) – The hotel group announced Tuesday evening the launch of this program worth 400 million euros which follows the raising of its rating by Standard and Poor’s in investment category.
With the recovery of tourism, Accor’s financial balance sheet is becoming increasingly robust and, as a result, the company is increasing the return to its shareholders.
The hotel group indicated in June that it wanted to return around 3 billion euros to its holders over the period 2023-2027. The company headed by Sébastien Bazin is giving substance to this commitment: it announced Tuesday evening the launch of a share buyback program of 400 million euros over a period which runs from this Wednesday, October 11 to April 11.
“The price per share cannot exceed the maximum price of 70 euros set by the combined general meeting of shareholders of May 17, 2023. The shares repurchased will be allocated to the cancellation objective,” the company indicated in a press release. .
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A quick and important program
“The announcement of the share buyback by Accor today (Tuesday evening, Editor’s note) was the most anticipated in the sector, but the good surprise today is the scale and speed of the buyback plans”, appreciates the bank Jefferies.
“The scale of redemptions demonstrates confidence in the macroeconomic environment and in the travel outlook over the next six months. This is interesting in a consumer context that seems increasingly under pressure,” he explains. She.
This announcement allows Accor shares to gain 1% around 10:50 a.m. to 31.85 euros (with a peak of +2.7%) in a frankly bad market, the SBF 120 losing 0.9% at the same time.
As Accor points out, this decision follows two other announcements which seem to have been prerequisites for this share buyback program. First, the S&P rating agency raised the group’s credit rating on September 12 to “BBB-“, i.e. in investment category (as opposed to “junk”, the speculative category), against BB+ previously.
S&P observed that the hotel group demonstrated a strong recovery in its operational performance in the first half of 2023, with gross operating profit (Ebitda) more than doubling, and anticipates robust activity in the third quarter. The agency expects the group’s adjusted debt leverage (net debt relative to EBITDA) to fall to 2.5 in 2023 compared to 3.3 in 2022. Fitch had already raised the rating of the group in investment category last April.
The third trimester as a catalyst
Second, Accor refinanced an existing €500 million hybrid bond that was repayable from January 2024 by issuing a new €500 million hybrid bond last week with a first repayment option in April 2029 and which carries a coupon of 7.25%.
A measure which “opens the way for the launch of the share buyback program, which should take place quickly”, Stifel rightly observed. The bank emphasized that the raising of the group’s rating and the refinancing of this hybrid bond constituted two necessary prerequisites for these securities buyback operations.
Accor shares have posted a significant increase of 36% since the start of the year. But the value has seen a sharp decline of 8.5% since its annual peak reached in mid-September. “The recent weakness in stocks is uncorrelated with positive earnings momentum, and positive news flow, reflecting macroeconomic concerns about next year,” Stifel considers.
However, it remains to be seen whether the activity in the third quarter will be able to provide a boost to the stock. The turnover will be published on Thursday October 26 at 6 p.m.
Stifel expects growth in RevPAR, i.e. revenue per available room, the main barometer of activity in the hotel sector, of 14% year-on-year in the third quarter and considers that the company could raise its annual objective of ‘Ebitda for 2023, judging that it could reach more than 1 billion euros. For now, the company anticipates a result of between 930 million and 970 million euros. Jefferies also expects an increase of 14%, but considers that the group’s good dynamic is now “well known” to the market.
Julien Marion – ©2023 BFM Bourse
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