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Euro Disney S.C.A.'s interim results show a slight
Euro Disney S.C.A., the operator of Disneyland Paris in France, reported it has reduced its net loss by 10% in the first half of the fiscal year 2012-2013*, the latter amounting to €108.4 million against €120.9 million in the prior year.
This result in deficit, even if it is improving, is however to be qualified in view of the low operating key statistics revealed in the interim financial report of the company. Indeed, the attendance at the two theme parks is slightly down by 2% (6.7 million guests) during the first half, a consequence of a decline in the number of French, Belgian and Spanish visitors. The occupancy rate of the seven hotels managed by Euro Disney also dropped by 1.8 points to stand at 78% (against 79.8% in the previous year), which represents 24,000 less nights compared to the first half-year of FY 2011-2012. This is a result of a decrease in the number of Spanish visitors (offset by a slight increase in the number of UK visitors) and a slowdown in the activity of business tourism. The average spending per room remained steady at €207.84.
Despite these contrasting figures, the operating revenue is up 2% at €561.1 million euros (increase of €10 million) of which €311.4 million are from theme parks activity. This result is due to a 4% increase in average spending by visitors (€45.97) as well as to an increase in sales in Disney Village, up 17% primarily due to the activity of the new World of Disney retail store. Revenue of the real estate activity also increased after the sale of land in the first quarter, bringing the total turnover of Euro Disney S.C.A. to €567.7 million, up 2.8% compared to the first half of the previous year.
Sales remain nevertheless too low compared to the operating costs which have increased by 2% to stand at €650 million, mainly due to expenses related to new guest offerings, labor rate inflation and increased costs associated with higher real estate development activity. Only the marketing spending decreased by 2% over the period, reflecting there lower sales activities and media initiatives. The company also reduced its financial charges by more than 30% following the refinancing of its debt by The Walt Disney Company (TWDC) in 2012, which resulted in a decrease in average interest rates.
In terms of cash flow, Euro Disney S.C.A. has a balance of €68.7 million, down €161.7 million compared to the first half of fiscal year 2011-2012. Cash flow used by operating activities totaled €19.8 million, compared to € 12.3 million generated in the prior-year period. This decrease resulted from higher working capital requirements. Cash flow used for investing activities amounted to €52.2 million compared to 83.8 million in the previous first half. Finally, the cash flow generated by financing activities totaled €26.4 million compared to €64.2 million last fiscal year. During this period, the company drew €30 million from the € 250 million standby revolving credit facility granted by TWDC.
Euro Disney S.C.A. has confirmed its targets during a financial presentation: drive operational profit to generate increased cash flow in order to reinvest in the business and reduce the net debt. Commenting on the results, Philippe Gas, Chief Executive Officer of Euro Disney S.A.S, said: "Delivering 3% revenue growth during our first semester is encouraging given the current economic environment and clearly demonstrates the resiliency of Disneyland Paris. Three years ago, we made the decision to increase our investments in the guest experience and the Resort in general and therefore focus on guest spending growth. Our results for the first semester are in line with this strategic choice with a 4% increase in guest spending and a slight decrease in visitation. We are seeing the first concrete benefits of the debt refinancing transaction, with substantial interest charge savings for the first semester. With the refinancing, we also benefit from greater flexibility to continue to invest in order to further strengthen the appeal of Disneyland Paris.”
Euro Disney's business is subject to the effects of seasonality and the annual results are significantly dependent on the second half of the fiscal year which traditionally includes the high season at Disneyland Paris. In the previous fiscal year, the company posted an annual loss of €100.1 million despite a record attendance of 16 million visitors.
Europe's leading tourist destination is currently continuing the celebrations of its 20th anniversary and the performances of its new night show Disney Dreams! until September 30. A new dark ride inspired by the famous cartoon Disney/Pixar Ratatouille is under construction and will open in 2014 at Walt Disney Studios Park. (See our previous article below for more information)
“In the second half of the year, we will continue to build on both the success of the 20th Anniversary celebration, which was extended for another 6 months, and the strong commitment of our Cast Members to keep delivering on our brand promise. At the same time, we remain cautious for the rest of the year in light of the continued challenging economy," concluded Philippe Gas.
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