Weak demand and London refurb costs Mandarin Oriental

Mandarin Oriental International posted its preliminary results for the year to 31 December on Thursday, with combined total revenue of hotels under management down 1% to $1.32bn.

The company said underlying EBITDA was off 16% to $158.2m, while underlying profit attributable to shareholders was off 37% to $57.3m.

Profit attributable to shareholders was down 38% at $55.2m.

The company reported a 39% fall in underlying earnings per share to 4.56 cents, and a 41% reduction in total earnings per share to 4.4 cents.

Dividends per share were down 20% to 4 cents.

Looking on the assets side, net asset value per share was off 5% during the year to 93 cents, while adjusted net asset value per share improved 9% to $3.10.

The net debt to shareholder funds ration was up to 25%, from 11% in 2015, while net debt to adjusted shareholders funds doubled to 8% from 4% in the previous year.

Mandarin Oriental’s board said the results came about as weak demand persisted in its key cities, alongside the phased renovation of its London property.

It also highlighted a new management contract it signed in Hawaii during the period.

“Challenging market conditions are expected to continue to impact the Group, and earnings will also be disrupted by the renovation of the London hotel,” said chairman Ben Keswick,

“Nevertheless, the group's strong brand position, healthy balance sheet and continued portfolio development will underpin its future performance.”