Transcorp Hotels’ earnings reach 11-year high, up 164% in H1

The hospitality industry favoured Transcorp Hotels in the first half of the year as earnings reported by the company in the six months that ended June 2024 surged by 164 percent, its highest in at least 11 years, BusinessDay analysis reveals.

According to the company’s financial statement, its after-tax profit rose to N6.6 billion reported in the first half of 2024, up from N2.5 billion reported in the same period of last year.

The hospitality provider revenue grew by 61 percent to N29.7 billion from N18.4 billion.

The growth reported by the hotel company can be attributed to a 60.6 percent rise in its room revenue-generating segment which grew to N19.6 billion in H1 from N12.2 billion in the same period of 2023, thereby accounting for 65.9 percent of the total revenue reported in the period.

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Followed by its food and beverage revenue-generating segment which grew by 70.9 percent to N8.6 billion, up from N5.03 billion.

As revenue grew, so did profit. In the six months ended June 2024, the profit margin grew by 22.2 percent in H1 from 13.5 percent in the same period of 2023.

The firms’ cost of sales grew by 73.4 percent to N8.5 billion from N4.9 billion, with rooms, and food and beverages accounting for 34.1 percent and 62.3 percent of the total cost of sales in the period.

Interest on debts and borrowings drove finance costs to N1.4 billion in H1, down from N1.8 billion in the corresponding period of 2023.

Transcorp Hotel’s other operating income was up by 346 percent to N4.3 billion from N964 million, driven by an unrealised foreign exchange gain of N3.8 billion.

Its operating expenses, however, grew by 50 percent in the first six months to N13.2 billion from N8.8 billion in the corresponding period of 2023.

The results also showed that total assets grew by 11.5 percent to N136.7 billion in H1 from N122.5 billion in the same period last year.

In the same vein, total shareholders’ funds grew by 12.5 percent to N73.4 billion from N65.2 billion.

Cash and cash equivalents, however, were up by 141 percent to N12.3 billion in the first six months from N5.1 billion in the corresponding period of 2023.

Net cash flow from operating activities fell to N5.6 billion from N6.5 billion, thereby indicating that the firm is not generating enough cash from its operations.

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Its net cash from investing activities during the period was negative, totalling N2.3 billion from N-1 billion. This is largely due to the N2.6 billion purchase of property, plants, and equipment during the period.

Net cash flow from financing activities in H1 reported a negative N2.1 billion, lower than the N4.3 billion reported in the same period last year.

During the period under review, Transcorp repaid borrowings amounting to N1.09 billion, paid interests of N1.15 billion, and dividends of N2.04 billion.

Transcorp Hotels reported earnings per share of N65 per share in the first six months of 2024, up from N24 in the corresponding period of 2023.

In a recent statement, Transnational Corporation Plc (Transcorp Group), along with its listed subsidiaries, Transcorp Hotels Plc and Transcorp Power Plc have paid their shareholders’ interim dividends totalling N16.33 billion, for the first time in the company’s history.

Transcorp Group paid an N4.065 billion interim dividend, Transcorp Hotels (N1.024 billion) while Transcorp Power paid an N11.25 billion interim dividend.

“This milestone reflects Transcorp Group’s commitment to delivering sustainable value to its shareholders and demonstrates the strength and resilience of its diversified portfolio,” the statement said.