Scandic Hotels reported a 22% rise in adjusted core profit for the third quarter, reaching 1.33 billion Swedish crowns compared with 1.09 billion a year earlier. Management fees from hotels owned by Dalata, which Scandic has since acquired, accounted for around a third of that increase.
Fees tied to the management of Dalata properties contributed 84 million crowns to adjusted core profit and added 91 million crowns to reported sales in the quarter. Scandic completed the acquisition of Dalata's portfolio on Nov. 2 for approximately €500 million, bringing 57 hotels into the group with about 12,500 rooms and a development pipeline of roughly 1,600 additional rooms.
Revenue, margins and operating results
Net sales for the quarter rose 7.9% to 6.88 billion crowns from 6.37 billion crowns a year earlier. Currency movements contributed 125 million crowns to that growth, while organic expansion accounted for 4.5% of the increase. The adjusted core profit margin expanded to 19.3% from 17.1% in the prior-year quarter.
Operating profit climbed to 1.31 billion crowns from 1.17 billion, and net profit increased to 648 million crowns from 557 million. Key operating metrics improved as well: occupancy averaged 75.5% compared with 74.2% a year earlier, revenue per available room rose 6.8% to 1,031 crowns, and the average daily room rate increased 4.9% to 1,365 crowns.
Regional performance
Scandic highlighted a particularly strong quarter in Sweden, where the company said activity was boosted by concerts and major conferences. Swedish sales rose 7.1% to 2.17 billion crowns and adjusted core profit increased to 534 million crowns from 438 million, yielding a margin of 24.7% versus 21.6% in the previous year.
In Norway, sales grew 9.5% to 2.08 billion crowns, though growth excluding currency effects was 2.3%. Adjusted core profit in Norway was 432 million crowns compared with 406 million a year earlier, and the margin moved to 20.8% from 21.4%.
Finland's quarterly sales rose 3.9% to 1.26 billion crowns, with adjusted core profit at 203 million crowns versus 177 million in the prior-year period.
Nine-month picture and cash flow
For the nine-month period, Scandic reported sales of 3.30 billion crowns, down 3.2% from the prior year, a decline the company attributed to weak demand and lower room rates in the first half. Adjusted core profit for the nine months was 258 million crowns versus 342 million a year earlier.
Free cash flow for the quarter was 945 million crowns compared with 593 million previously. Over nine months, free cash flow totaled 1.00 billion crowns versus 621 million, driven in part by a reduction in taxes paid to 55 million crowns from 258 million crowns, a change the company said reflected a net tax repayment in Sweden.
Balance sheet and acquisition funding
Scandic funded the Dalata acquisition with a combination of existing cash and additional debt. At Sept. 30 the company reported net cash of 648 million crowns, compared with net debt of 62 million a year earlier. The closing of the Dalata transaction will move the group out of a net cash position.
Outlook
Chief executive Jens Mathiesen said the start of the fourth quarter has been positive, with solid demand for business travel, meetings and conferences. The company expects occupancy and room rates to be slightly higher than in the prior-year quarter.
Contextual note
The quarterly results reflect both underlying operational improvements across Scandic's markets and one-off contributions from management fees on Dalata properties prior to their acquisition. The company reported higher sales, expanded margins, stronger operating profit and improved free cash flow in the quarter, while noting that nine-month results remain affected by earlier weakness in demand and rates.