Euro Disney SCA Fiscal Year 2011 First Half Results

[dagobert]

Euro Disney SCA, the operating company of Disneyland Paris, has reported the First Half Results:
http://corporate.disneylandparis.com/CO ... r-2011.pdf

EURO DISNEY S.C.A. Reports First Half Results

Six Months Ended March 31, 2011

• Total Revenues increased 8% to € 559 million, due to higher Resort volumes and average spending per room
• EBITDA increased € 18 million to € 25 million
• Net loss narrowed by € 15 million to € 99 million
• Repayment of € 46 million of debt during the First Half

Resort operating segment revenues increased by 6% to € 547.7 million from € 517.3 million in the prior-year period.

Theme parks revenues increased by 5% to € 300.4 million from € 287.3 million in the prior-year period due to a 5% increase in attendance to 6.9 million. This increase in attendance resulted from more guests visiting from France and
Belgium, partially offset by a decline in visits from the Netherlands. Average spending per guest remained stable
compared to the prior-year period.

Hotels and Disney® Village revenues increased by 11% to € 228.2 million from € 205.3 million in the prior-year period, mainly due to a 6% increase in average spending per room to € 200.64, combined with a 3.8 percentage points increase in hotel occupancy to 83.4%. The increase in average spending per room was due to higher spending on food and beverage and an increase in daily room rates. The increase in hotel occupancy resulted from 40,000 more room nights sold compared to the prior-year period, due to more guests visiting from France, and higher business group activity.

Other revenues, which primarily include participant sponsorships, transportation and other travel services sold to guests, decreased by € 5.6 million to € 19.1 million compared to € 24.7 million in the prior-year period. This decrease was primarily due to lower sponsorship revenues and a legal settlement gain in the prior-year period.

Real estate development operating segment revenues increased € 9.4 million to € 11.4 million, compared to € 2.0 million in the prior-year period. This increase is due to a greater number of transactions compared to the prior-year
period.

Net Loss
For the First Half, the net loss of the Group amounted to € 99.5 million compared to € 114.5 million for the prior-year period. Net loss attributable to equity holders of the parent amounted to € 82.9 million and net loss attributable to minority interests amounted to € 16.6 million. The decrease of the Group's net loss is due to the increased revenues and the improved operating margin compared to the prior-year period.

Cash flows
Cash and cash equivalents as of March 31, 2011 were € 323.7 million, down € 76.6 million compared with September 30, 2010, and up € 40.2 million compared with March 31, 2010.

The figures don't look so bad, but there is still a net loss.

[davewasbaloo]

It is likely they will always run at a loss, most businesses do, on paper. You can offset capital expenditure and other investments to get get tax breaks and still turn a profit. This is often a move to pay as little amount of tax as possible, and most American and British companies do this.

[ford prefect]

Not a bad set of results, all things considered.

The positive elements also include the further repayment of the structural debt.

On a downbeat note, there is a realistic comment that the group may yet fail to meet its obligations and have to draw down some of the $100m line of credit available to it from TDWC.  

This might put the mockers on any future ride developments.

[dagobert]

ED SCA released the Interim Report 2011:
http://corporate.disneylandparis.com/CO ... t-2011.pdf

That's the current debt of ED SCA:

The Group's principal indebtedness decreased € 35.9 million to € 1,899.2 million as of March 31, 2011
compared to € 1,935.1 million as of September 30, 2010. The decrease primarily relates to the € 45.6 million
repayment of borrowings in the First Half. Partially offsetting this decrease is the conditional deferral into
subordinated long-term debt of € 5.1 million of interest payments due to Caisse des dépôts et consignations
("CDC"). The capitalization of accrued interest on The Walt Disney Company ("TWDC") loans and CDC
subordinated loans also increased the Group's indebtedness by € 2.1 million and € 2.0 million, respectively.

[CafeFantasia]

Disclaimer: I'm really bad at maths.

If Euro Disney's debt decreased by €35.9 million in the last year, at that rate, won't it be 52.9 years until they pay off all their debt? Have I got that right? Probably not.

[Josh]

Well the plan is as their revenue should increase a lot by then, so hopefully it will be half that.

[ford prefect]

Disclaimer: I'm really bad at maths.

If Euro Disney's debt decreased by €35.9 million in the last year, at that rate, won't it be 52.9 years until they pay off all their debt? Have I got that right? Probably not.

No, it will be longer due to interest accrued.

[davewasbaloo]

I am afraid that is the way of capital investments, but in DLP's case, it is also why we have so little entertainment, and so few attractions compared to the other resorts :-(

[CafeFantasia]

So basically, for the next 26 years, Disneyland Paris is going to be in a similar situation, focusing on new festivals and parades for toddlers each year, struggling to maintain its two parks, and unable to keep up with all the attraction improvements already implemented in America? That doesn't sound like a particularly positive future.

26 years from now takes us to 2037!

[davewasbaloo]

I am hoping not, but really, I think unless it helps drive a profit (e.g. Earl of Sandwich, World of Disney, Pierre and Vacances Nature Village), I am not hugely hopeful. However, if an attraction or event looks like it will increase spending, then there is a chance. There are rumblings of WDC gifting a few things for anniversaries. That may be a way forward.

[dagobert]

The future of DLRP doesn't look great. It clearly needs more visitors. At the moment approximately 15mio people visit DLRP each year and this number is not enough to make a profit. It seems DLRP needs around 18 to 20 mio guests to earn money. The hotels have an occupancy rate of over 80% and so there is not much room for growth. DLRP has to advertise the resort all over Europe and not just in some countries to attract more people. A new Disney hotel is also needed, otherwise new guests will stay at third party hotels and Disney only makes money with tickets.

[davewasbaloo]

But the resort is the most visited in Europe, and it meets it's forecasts (DLP was originally forecast to have 10m visitors a year with the Studios raising it to 15m with the opening of the Studios). so they are hitting their numbers in terms of visitors. As for room utilisation, those are still enviable numbers, but not as high as other Disney properties around the globe.

I think the focus on kiddy things are hurting them at the moment, and hopefully the complaints being made with this year's celebration are being heard. You know it is poor when my 5 and 7 year old (core target) were not interested. We are not in a hurry to return for the first time in 19 years of a park in Europe, how sad is that?

[dagobert]

When 15 mio guests are the expected number, then why doesn't ED SCA make money? The debt of the resort has nothing to do why the resort doesn't earn money? The next thing is that DLRP is operated with less CMs than other resorts. So if DLRP would employ more CMs, Disney would be even more in the reds.

I wonder how the financial report of Euro Disney Associes, the operator of the parks, looks like. We only see the financial report of the Holding Company.

[davewasbaloo]

Some figures are dark for a reason, you will never get the full picture from the outside I am afraid. But the debt is a huge burden. The interest rates in the 80's and 90's killed the place, and I remember in 1994, there was actually talk of just closing the place or selling it.  I doubt those talks got very far, but it is why we got the attractions we did in the following years instead of the more grand and expensive ones.

We are not just paying the spent costs of building and running the place, but the high interest before. The debts have been restructured before, and they may again, it all helps. But there are not many more props to sell on Ebay, or Malls to sell off under licence.

And Disney have cut quality on their staff training so much, that companies like Marriott and Radisson, that used to use the Disney cleaning and maintanence contracts, got rid of Disney altogether and brought their own people in - mainly due to lack of quality rather than expensive costs.

Do I have the answer? I have a few, but sadly I upset Jay a few years ago and that closed my door to potentially sorting it out. I am afraid I do not give away pro bono consultancy to the mouse.