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Euro Disney 2011 First Half Results: Revenues Up and Increased Capex

Opinion

Related: A look at EuroDisney’s 2010 results  / EuroDisney’s Strategy to 2030: Doubling Capacity and Eco Tourism /All the Disneyland Paris magic at your fingertips on your iPhone! / OLC’s 2013 Strategic Plan: Bringing Happiness

Performance highlights for the six months to 31 March 2011 include:

  • resort revenues up 6% to €548m

  • attendance up 5% to 6.9 million
  • hotel occupancy rates up from 79.6% to 83.4%
  • average spending per room up 6% to €201
  • EBITDA up from €8m to €25m

  • Net loss reduced by 13% to €100m

  • Scheduled debt repayment of €46m

  • 2011 annual investment budget increased from €37m to €81m

Theme park attendance benefited from more visitors from France and Belgium offsetting a decline in guests from the Netherlands, while average spend per guest remained stable at around €43.  Hotel disneyland paris euro disney castle theme parkrevenues were up as a result of an additional 40, 000 additional hotel rooms sold compared to the prior period, and in addition, there was a higher spend on food and beverage as well as increased room rates.

Other revenues, which include sponsorships, were down by 23% to €19m, although some of this decrease was due to a legal settlement gain in 2010.

Cash

Operating cashflows at first glance look poor at €6m compared to €28m, however this is because the prior period benefited from a reclassification from working capital into long term debt when €25m of royalties and management fee payments were deferred.

Loans and Capex

Euro Disney have previously stated their intention to repay 25% of the €2billion debt by 2013, of which €123m of repayments are scheduled for 2011. In the first half €46m was repaid, leaving €77m for the rest of the year.

The good news is that as a result of improved performance Euro Disney has been permitted by their lenders to increase their annual investment budget, which includes both capex and "fixed assets rehabilitations".  A 3% cap of prior fiscal year’s adjusted consolidated revenues was imposed in 2010 when Euro Disney failed to meet objectives and had to defer royalty and management fee payments.  On 31 March 2011, the lenders agreed to an increase in the 2011 investment budget from €37m to €81m, and boost the 2012 investment budget up to 5% of prior fiscal year’s adjusted consolidated revenues. 

This is certainly going to be needed in order to realise Euro Disney’s strategy to 2013, which includes doubling theme parks and hotel capacity and developing the eco tourism project , Les Villages Nature de Val d’Europe.

CEO’s comments

Commenting on the results, Philippe Gas, Chief Executive Officer of Euro Disney S.A.S, said:

“As we head into our important second semester, we are encouraged to end the first semester with our fourth consecutive quarter of growth in Resort revenues. We increased our attendance by 5% while essentially maintaining guest spending in the parks, and also improved both hotel occupancy and guest spending per room.

We are encouraging our guests to book further in advance of their vacation by providing them with early-booker discounts and they are responding favorably. This has given us greater business visibility and allows us to better manage demand.

We continue to focus on delivering a high quality, unique Disney experience for our guests. We recently launched the Disney Magical Moments Festival, our new annual celebration. I would also like to recognise our Cast Members who are dedicated to bringing the Disney magic to life for our guests.”

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