Club Med Up Most in Seven Weeks as Earnings Beat Estimates

Club Mediterranee (CU) SA, the French operator of 75 holiday resorts worldwide, rose the most in seven weeks in Paris trading after first-half earnings beat analyst estimates and summer bookings rose.

Club Med shares climbed as much as 5.4 percent. Summer- period bookings advanced 5.4 percent, led by a 17 percent rise in the Americas and a 5.2 percent increase in Europe, Paris- based Club Med said in a statement today. First-half operating income rose 67 percent to 47 million euros ($68.8 million), beating consensus estimates of 35 million euros to 40 million euros, according to analysts at Oddo & Cie.

Club Med, which is aiming to increase capacity at its two most expensive resort categories, said customers visiting those resorts increased 22 percent in the first half, while total customers rose 7 percent. The company, which last year formed a joint venture with Fosun International Holdings Ltd. to develop resorts in China, said the number of new customers in that country rose 56 percent.

Club Med “retained pricing power in a very difficult environment, notably given higher oil and transport costs,” the Oddo analysts said. They raised their recommendation on the shares to “neutral” from “reduce.”

All-Inclusive

Club Med shares advanced as much as 83 cents to 16.18 euros, the biggest intraday jump since April 20, and traded 2.2 percent higher at 15.69 euros as of 12:42 p.m.

Upscale, all-inclusive holidays for affluent families and couples are the fastest growing segment of the leisure industry, Chief Executive Officer Henri Giscard d’Estaing said by phone.

Bookings in the past four weeks fell 6.8 percent because of political unrest in North Africa and natural disasters in Japan, Club Med said.

“The overperformance delivered over the winter” may help offset “the unfavorable impact over the summer of currently known events,” the CEO said in the statement.

Club Med may form partnerships in other parts of the world to develop projects, Giscard d’Estaing said, citing Brazil as one possibility. The company’s main shareholders, who include Moroccan and Middle Eastern investors, have a “major role” in Club Med’s destination markets, he said.

To contact the reporter on this story: Armorel Kenna in Milan at akenna@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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