Eurodisney seen diving to a loss with new park
By Caroline Brothers
11/08/02 08:34 ET
PARIS (Reuters) -- French theme park operator Euro Disney is seen swinging to a full-year net loss when it publishes results on Wednesday, pressured by the cost of launching a second park next to its Magic Kingdom.
Nearly 40 percent-owned by the U.S. Walt Disney Co, the company has had record occupancy levels at its neighbouring hotels, beating the French market, which have mostly plugged a shortfall in turnover from lagging park visitor numbers.
But operating costs including hefty marketing expenditures associated with the opening of the Walt Disney Studios, a new park dedicated to film and cinema located next door to the Magic Kingdom, mean it will not generate a profit this year, analysts say.
Seven analysts polled by France's JCF Group predicted Euro Disney would swing to a net loss of 18.6 million euros ($18.8 million) in the fiscal year to end-September, versus a profit of 30.5 million euros the year before. Forecasts ranged widely from a loss of 8.3 million euros to a loss of 46.9 million.
Profit before interest and tax (EBIT), meanwhile, was seen slightly softer at 180 million euros after 185 million previously, on sales up 7.4 percent at 1.080 billion.
Analysts said the launch and marketing costs and asset write-downs linked to the new park would depress earnings this year, while attendance has not lived up to company expectations. Euro Disney said in July it would step up marketing to reverse the trend.
"We are hoping for new guidance on the park -- the number of people attending and whether the trend is encouraging or not," said Tristan d'Aboville at Aurel Leven.
SPENDING SHUDDERS
He will also be seeking details of capital expenditure, margin levels and whether the new park will bring a margin improvement in the 2002/03 year.
Most analysts agree Euro Disney has to keep adding attractions to its Disneyland Paris site to keep visitors coming back for more.
But some shudder at memories of what they say was the 70-80 million euro cost of building the Magic Kingdom's Space Mountain and are nervous of increased capital expenditure that might be in the works.
The Walt Disney Studios, whose construction came in on budget at 610 million euros, was opened to great fanfare in March.
Euro Disney had hoped it would boost attendance to 16 million from the original park's 12.2 million and add three percentage points to its 2000/01 operating margin of 18.4 percent, once both parks were fully on stream in 2002/03.
But less robust attendance than hoped has prompted analysts to revise down their forecasts for this and next year.
Most say some disappointment is already priced into a share that has lost 43 percent of its value this year and underperformed France's SBF120 index by 20 percent since January.
By Caroline Brothers
11/08/02 08:34 ET
PARIS (Reuters) -- French theme park operator Euro Disney is seen swinging to a full-year net loss when it publishes results on Wednesday, pressured by the cost of launching a second park next to its Magic Kingdom.
Nearly 40 percent-owned by the U.S. Walt Disney Co, the company has had record occupancy levels at its neighbouring hotels, beating the French market, which have mostly plugged a shortfall in turnover from lagging park visitor numbers.
But operating costs including hefty marketing expenditures associated with the opening of the Walt Disney Studios, a new park dedicated to film and cinema located next door to the Magic Kingdom, mean it will not generate a profit this year, analysts say.
Seven analysts polled by France's JCF Group predicted Euro Disney would swing to a net loss of 18.6 million euros ($18.8 million) in the fiscal year to end-September, versus a profit of 30.5 million euros the year before. Forecasts ranged widely from a loss of 8.3 million euros to a loss of 46.9 million.
Profit before interest and tax (EBIT), meanwhile, was seen slightly softer at 180 million euros after 185 million previously, on sales up 7.4 percent at 1.080 billion.
Analysts said the launch and marketing costs and asset write-downs linked to the new park would depress earnings this year, while attendance has not lived up to company expectations. Euro Disney said in July it would step up marketing to reverse the trend.
"We are hoping for new guidance on the park -- the number of people attending and whether the trend is encouraging or not," said Tristan d'Aboville at Aurel Leven.
SPENDING SHUDDERS
He will also be seeking details of capital expenditure, margin levels and whether the new park will bring a margin improvement in the 2002/03 year.
Most analysts agree Euro Disney has to keep adding attractions to its Disneyland Paris site to keep visitors coming back for more.
But some shudder at memories of what they say was the 70-80 million euro cost of building the Magic Kingdom's Space Mountain and are nervous of increased capital expenditure that might be in the works.
The Walt Disney Studios, whose construction came in on budget at 610 million euros, was opened to great fanfare in March.
Euro Disney had hoped it would boost attendance to 16 million from the original park's 12.2 million and add three percentage points to its 2000/01 operating margin of 18.4 percent, once both parks were fully on stream in 2002/03.
But less robust attendance than hoped has prompted analysts to revise down their forecasts for this and next year.
Most say some disappointment is already priced into a share that has lost 43 percent of its value this year and underperformed France's SBF120 index by 20 percent since January.