Cyprus’ leading cruise and hotel group Louis disappoints with 9M results

Louis Plc (LUI.CY) released a disappointing set of 9M08 results posting a loss of EUR 2.8 mln compared to a profit of EUR 30.4 mln in 9M07 attributable to shareholders primarily related with the weak performance in the cruise business.
Group revenues decreased by 14.6% Year-on-Year to EUR 227 mln owing to a weaker performance in the cruise (15.7% decrease y-o-y) which contributes 72% of the
Group revenue decrease. Revenue from the hotel division also decreased 5% which contributes 10% of the Group revenue decrease.
Lower cruise activity in winter (fewer ships operated vs. the corresponding 2007 period), lower loading factors and fewer hotel units in operation (4 hotels in Greece plus the Hilton), lower hotel occupancies as well as the weaker USD and GBP vs. the EUR led to the negative performance in revenue.
Higher oil prices also contributed in the pressured operating income despite the Company’s efforts to hedge the risk. However, the recent decrease in oil prices did not affect the results since it came towards the end of the 9M period of 2008.
Louis Hotels posted an increase in operating profit despite the decrease in its revenue. This was the result of the effective restructuring of the hotels’ division. It is noted that in 2007 operating profit, there is a EUR1.7mln contribution of Hilton Cyprus which was later sold. Net finance costs were maintained at EUR17.9mln.
It is important to note that in 2008 LUI sold 2 cruise ships realizing a loss of EUR7.6mln and refinanced Thompson Spirit and Thomson Destiny realizing a profit of EUR10.9mln while it realized a oneoff profit of EUR20.9mln from the sale of Hilton Cyprus and other properties in 2007. Adjusting for the aforementioned one-off items, 9M 2008 loss stands at EUR7.1mln compared to a profit of EUR8.3mln in 9M 2007 according to CISCO analysis.
Management noted that prospects for the full year 2008 are negative given the
adverse market conditions. Regarding 2009, Management has already incorporated in its budget lower revenue but is also considering a number of measures to bring LUI back to profitable levels.