Millennium & Copthorne warns of ‘challenging’ 2019 as profits plummet 28 per cent

Millennium & Copthorne warned today that it anticipates a challenging 2019 as it revealed that profits fell 28 per cent last year.

The figures

In its full year results, the hotel company reported that profit before tax for 2018 fell 28 per cent to £106m in 2018, down from 2017's total of £147m.

Revenue also slipped 1.1 per cent to £997m, while net debt increased by £77m from 2017 to £727m.

However, the hotel chain upped net cash by £21m to £375m. 

Earnings per share plunged 65.6 per cent to 13.1p, while the ordinary dividend fell 35 per cent to 4.2p, down from 6.5p last year.

Shares rose less than one per cent to 461.5p on the news.

Why it's interesting

Millennium & Copthorne blamed multiple factors for the underwhelming results, including higher operating costs, impairment losses, and the closure of its Mayfair hotel, which cost the company £20m in lost revenue and £12m in lost profit.

However, like-for-like sales grew 2.4 per cent over the year.

Still, Millennium & Copthorne predicts 2019 to be just as challenging, with continued investment and other projects expected to eat into the company's earnings.

“2019 will be another challenging year for the group, with significant capital projects underway and several large hotels earmarked for major renovations,” Singaporean billionaire and chairman Kwek Leng Beng said.

Millennium & Copthorne plans to re-open the Mayfair hotel as The Biltmore, Mayfair – LXR Hotels & Resorts in partnership with Hilton. It also bought its Millennium New Plymouth New Zealand hotel and re-opened its M Social Auckland hotel.

What Millennium & Copthorne said

Chairman Kwek Leng Beng said: “The hospitality industry faced a range of geo-political and global economic headwinds in 2018, many of which look set to continue in the current year, including US/China trade relations, Brexit and increasing minimum wage levels in many jurisdictions.

“The shortage of talent-from rank and file to senior management-is intensifying with many new hotels being built around the world, not to mention the growth of Airbnb and serviced apartments.”