Valamar Riviera 1Q 20 - No light at the end of the tunnel

1Q 20 wrap-up: Only taken figures for January and February, our estimates would be close to companys achievements. Following restrictive measures and recommendations, all hotels were closed in mid-March. Compared to its domestic and international peers, Valamar also reported a strong top-line decline but in lower double-digits. We would interpret this a sign of a successful winter season of its only international hotel (Valamar Obertauern). The main top-line headwind was occupancy, while ADR even manged to increase 1.1% yoy to HRK 528. Negative top-line developments were on EBITDA level more than outweighed by a higher depreciation and significantly reduced staff costs (-15%). Namely, Valamar Riviera applied for the state support and HRK 8.2 mn were granted for disbursement of a minimum wage for March to its 2,537 employees (out of 2,614). Most of the companys debt is long-term and denominated in EUR and thus bottom-line suffered from the negative FX effects. As of the end of 1Q 20 net debt/T12MEBITDA adj. ratio stood at 3.3x.