City Lodge Hotels saw its share price close more than 5% down on Tuesday after releasing a trading statement for the six months ended December 31, 2019.
The group blames weak trading conditions for the expected 49-54% drop in headline earnings for the half-year.
In terms of the JSE listings requirements, companies are required to publish a trading statement as soon as they are reasonably certain that the financial results for the current reporting period will be more than 20% different than those of the prior comparative period.
This decline follows City Lodge seeing average occupancies for its South African operations fall to 58% from 61% the full year to June.
At the time, it blamed the slow economy for the drop in occupancy.
In August last year the hotel chain’s share price slid to below R100 for the first time in seven years. The stock has fallen further since then. Following Tuesday’s decline, it closed at R67.71.
In its current trading statement, the group alerted the market to lower earnings for the current reporting season.
It says the decrease is a result of weaker trading conditions in the company’s primary and secondary markets as well as the adoption of International Financial Reporting Standard (IFRS) 16 leases in the current reporting period.
“On a comparable basis, excluding the effects of implementing IFRS 16 and unrealised exchange gains or losses, normalised headline earnings would be between R119.2 million to R111.0 million, being a decrease of between 27% and 32% compared to the normalised headline earnings of R163.3 million for HY2018,” the statement reads.