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Euro Disney S.C.A. reports mixed first half results
with a decrease in attendance and hotels occupancy
Euro Disney S.C.A., the operator of Disneyland Paris, reported today the results of its consolidated group for the first six months of fiscal year 2012 which ended March 31, 2012, just before the start of the 20th anniversary celebrations.
These results are contrasted between an increase in revenues of the resort operating segment of 1% to 551.1 million euros and a decrease in attendance at theme parks of 1% (6.8 million visitors against 6.9 in 2011) and a decrease in hotel occupancy rate by 3.6 percentage points (79.8% against 83.4% in 2011).
The first half results of the group is a net loss amounted to € 120.9 million compared to € 99.5 million for the prior-year period.
Revenues by Operating Segment
Resort operating segment revenues increased 1% to € 551.1 million from € 545.8 million in the prior-year period.
Theme parks revenues increased 2% to € 304.8 million from € 299.8 million in the prior-year period, primarily due to a 2% increase in average spending per guest to € 44.11, partly offset by the decrease in attendance. The increase in average spending per guest was due to higher spending on admissions and merchandise. The decrease in attendance primarily resulted from fewer guests visiting from Italy, the Netherlands, Belgium and Spain, partly offset by a higher number of guests visiting from France.
Hotels and Disney Village revenues decreased 1% to € 224.5 million from € 226.9 million in the prior-year period, reflecting the decrease in hotel occupancy and a temporary reduced restaurant capacity in the Disney Village, partly offset by a 4% increase in average spending per room to € 207.29. The decrease in hotel occupancy resulted from 33,000 fewer room nights sold primarily due to fewer guests visiting from Italy and the United Kingdom, as well as lower business group activity, partly offset by more French guests staying overnight. The reduced Disney Village restaurant capacity was due to certain rehabilitations before the launch of the 20th Anniversary celebration. The increase in average spending per room resulted from higher daily room rates, partly offset by lower spending on food and beverage and merchandise.
Other revenues increased by € 2.7 million to € 21.8 million, compared to € 19.1 million in the prior-year, primarily due to higher sponsorship revenues and increased revenues on transportation and other travel services sold to guests.
Real estate development operating segment revenues decreased by € 10.1 million to € 1.3 million, compared to € 11.4 million in the prior-year period. This decrease was due to a lower number of transactions closed in the First Half compared with the prior-year period.
Costs and Expenses
Direct operating costs increased by € 13.9 million compared to the prior-year period, mainly due to labor rate inflation and costs associated with the preparation of the Resort's 20th Anniversary celebration, partly offset by reduced costs associated with lower real estate development activity.
Marketing and sales expenses increased by € 2.4 million due to higher labor costs and increased sales activities. General and administrative expenses increased by € 2.5 million due to higher labor costs.
Net Financial Charges
Financial income increased by € 0.7 million compared to the prior-year period due to higher short-term interest rates, partly offset by a lower average level of cash and cash equivalents. Financial expense decreased by € 1.9 million compared to the prior-year period primarily due to lower average borrowings.
Financial Covenants
The Group has defined annual performance objectives under its debt agreements and must also respect certain financial covenants.
For fiscal year 2012, if compliance with financial performance covenants cannot be achieved, the Group will have to appropriately reduce operating costs, curtail a portion of planned capital expenditures, sell assets and/or seek assistance from TWDC or other parties as permitted under the debt agreements. Although no assurances can be given, management believes the Group has adequate cash and liquidity for the foreseeable future based on its existing cash position, liquidity from the credit lines available from TWDC, and the benefit of the conditional deferral of certain royalties, management fees and interest.
Perspectives and statements
The business of Disneyland Paris is seasonal, so the first half is less significant than the second one. During a conference call, the Chief Financial Officer of Euro Disney S.C.A. Mark Stead said that the outlook for the third quarter are encouraging with bookings currently up 5% (in terms of revenues) compared to 2011. The launch of the 20th Anniversary celebrations went well and the Group recorded a 3% increase in theme parks revenues despite poor weather conditions. He states, however, that the unstable economic situation in some countries - including Spain and Italy - currently forces the company to remain cautious. In addition, the company will now review each expense very carefully and does not anticipate an increase in labor cost as high as in 2011.
Commenting on the results, Philippe Gas, Chief Executive Officer of Euro Disney S.A.S, said: “The challenging economic environment has impacted attendance and occupancy compared to last year, but we are encouraged by our ability to continue to improve guest spending and resort revenues. This semester, we significantly increased our investments in the guest experience, through new entertainment and product offerings as well as targeted refurbishments in both our parks and hotels. These investments are essential for our 20th Anniversary celebration launched in April and the long term success of Disneyland Paris."
He adds : "As part of this celebration, we opened our new night-time spectacular, Disney Dreams®!, which brings Disney stories to life using the castle as a backdrop, and which is truly a unique experience for our guests. We remain excited about the 20th Anniversary festivities and the growth opportunity it presents. We look forward to celebrating this milestone with our guests, Cast Members, community and partners in the months ahead.”
Disneyland Paris will open in the coming months a new Meet & Greet location in Fantasyland (Meet Mickey) and a brand new retail store in Disney Village (World of Disney).
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NewsParcs will do a full coverage of the IAAPA Attractions Expo 2013 in Orlando to have a look at the latest trends and developments of the global theme park industry.
