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Walt Disney Parks & Resorts Second Quarter Results: Operating Income 3% Down

Opinion

Related: Euro Disney 2011 First Half Results: Revenues Up and Increased Capex / Walt Disney’s CEO Discusses Q2 2011 Results – Earnings Call Transcript / The Walt Disney Company Reports Second Quarter Earnings / EuroDisney’s Strategy to 2030: Doubling Capacity and Eco Tourism / OLC’s 2013 Strategic Plan: Bringing Happiness / Pigs in Pythons: Capex at Disney and Universal

Adversely affecting results were:

  • Lower operating income at Disney Cruise Line due to increased costs associated with the launch of the new cruise ship, the Disney Dream, in January 2011 and higher fuel and other operating costs for the existing fleet, which offset higher passenger cruise days.
  • The earthquake and tsunami in Japan resulted in a temporary suspension of operations at Tokyo Disney Resort and therefore a loss of royalties.   [Oriental Land Co Ltd  full year results to 31 March 2011 came in 5% lower on operating income than the February 2011 forecast and an extraordinary loss of ¥10bn was recorded.]
  • The timing of the Easter holiday meant that the current quarter included one week less of the Easter break than 2010.  The effect of this was wipe out a potential 2% increase in domestic attendance figures which remained flat compared to the prior period.

On the upside, Disneyland Paris and Hong Kong Disneyland Resort reported higher attendance and hotel occupancy, and there was higher guest spending at Hong Kong Disneyland Resort.   Also domestic performance showed a 6% rise in per capita guest spending driven by higher pricing and lower discounting.

Capex was significantly up on the previous period (Six months ended 2 April 2011: $1.5bn, Six months ended 3 April2010: $0.6bn) mainly due to the final payment for the Disney Dream.  For Euro Disney  car character made out of flowers in garden at disney world theme parkthere was good news: because performance objectives have been met, lenders have agreed to an increase in the capex budget. [See Euro Disney 2011 First Half Results: Revenues Up and Increased Capex]

In the May 10th Q2 earnings call Bob Iger, Disney’s President and Chief Executive Officer,   said, “While the spotlights shine brightly on Shanghai this quarter, work has continued on some other important parks and resorts initiatives. Crews are putting the finishing touches on Aulani, our Resort & Spa in Hawaii, which will welcome its first guests this August. Construction also continues on the expansion of Fantasyland at Magic Kingdom in Florida, which will more than double the size of 1 of Walt Disney World’s most popular lands.

And on the other side of the globe, shipbuilders in Papenburg, Germany continue to make progress on the Disney Fantasy, the sister ship to the Disney Dream, which will begin sailing in the spring of 2012. Disney Cruise Line also announced new 2012 itineraries that will enable us to bring the Disney Cruise experience to more guests and more places and demand for our cruise product remains very high.

I’m also pleased to report the Tokyo Disney Resort is now open following closure due to the March 11 earthquake and tsunami in Japan. And following its best year ever with record attendance, Hong Kong Disneyland continues to post-strong attendance numbers this year as well. The multiyear expansion effort that will add 3 new theme lands is running ahead of schedule, and we look forward to welcoming guests to the first of these Toy Story Land later this fall.”

 

Image: Kind courtesy Disney

 

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