Financial Statement Analysis

Accor SA

Outline
I.

Company Presentation
1.
2.

Key Figures
Brand Portfolio

II. Financial Analysis

1.
2.
3.
4.
5.

Profitability
ROE
OWC
Liquidity, Coverage & Solvency
Share Price

III. Economic Environment

IV. Conclusion
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Accor SA Key figures

French hotel chain founded in 1967 by Paul Dubrule & Grard

Plisson

Headquartered in Paris, France

First hotel chain world wide, with 3600 hotels in 92 countries, offering
470 000 rooms, from budget to luxurious accommodations

170 000 employees

Underwent major restructuring in 2010 as it sold the majority of it

Assets to focus on operating hotels without owning them

Accor SA Brand Portfolio

Financial Analysis - Profitability

In terms of profitability, discontinued operations and

fair value adjustments have had a significant
impact in 2010 and 2012.
Thus, gross profit is a better indicator of profitability,
and it is stable over the past couple of years, which
is positive.

Financial Analysis - ROE

Accors financial
leverage is increasing
since 2011, adding more
risk to its business.
There are fluctuations on
the tax part (Net
Profit/EBIT), but they are
mostly due to
discontinued operations
and fair value
adjustments.

Interest (EBT/EBIT) has been stable in recent years, indicating that

borrowing cost is stable.
Apart from 2012, there is an increasing trend in ROE. However, this is
largely due to increased leverage; shareholders should pay
attention to this.
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Financial Analysis - OWC

The OWCs sharp decrease in OWC in 2010 was caused by large

divestments and a drop in trade receivables, which is a positive sign
for Accor.
The negative OWC in days of sales essentially means that Accor uses
accounts payable as a source of financing.

2/11/2015

Sinong Li & Amaury

Gilliot

Financial Analysis Liquidity Coverage &

Solvency (I)

Both the current ratio and the quick ratio show a positive evolution, showing the firm
can cover its short-term obligations.
The same can be said for the coverage ratio, as its positive evolution implies Accor can
cover its decreasing interest expenses.
On a more negative note, the fixed charge coverage ratio is not as high as recent
years, implying Accor is suffering from increasing rent expenses. Given the importance
of rent expense in the hotel industry, this ratio should be kept in mind.
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Financial Analysis Liquidity

Coverage & Solvency (II)

As mentioned before, Accor is increasing its leverage ratio. This is

also visible in the solvency ratios.
Given the stability of its underlying assets (real estate), Accor can
finance its activities rather cheaply, which is positive. Moreover,
the group has several undrawn credit lines, illustrating a good
financial flexibility in case of crisis.
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Financial Analysis Share Price

Even if it has significant

volatility, share price has
increased since 2012,
showing higher confidence
from investors.
This is also illustrated with the
positive increase in the
equity ratios

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Economic Environment
The stagnating European economy could cause
problems if activity does not take off soon.
Fortunately, the Groups international exposure
creates a safety net. The Groups diverse activities,
ranging from low-cost (F1) to luxury (Sofitel) gives
additional safety to the firms future revenues.

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Conclusion
After suffering major restructuring of its Balance
Sheet but also of its Management, Accor Group is in
a healthy state.
It has already incurred important restructuring costs,
so it is safe to say the tough part is over.
All in all, Accor Group has been through rough
years, but right now it has a bright future.
Moreover, Accor is already showing it can put the
revenue generated from its divestments to good
use, as it planned to invest 225M over 5 years to
increase digital business.
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