A summary of the 2016 Euro Disney results.

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Euro Disney S.C.A. the operators of Disneyland Paris published their 2016 annual results yesterday evening and as many were expecting they did not make good reading.

The unfavourable economic conditions for the tourism industry in the Paris region has effected the resort severely resulting in record losses for the company.

Euro Disney has increased its annual net loss by more than eight times due  to a significant depreciation of its assets, and revenues for the Fiscal Year 2016 were €1,278 million, a decrease of 7% compared to the prior year.

In this gloomy context, the parent company, The Walt Disney Company, has agreed to waive the payment of royalties and  management fees for two years in order to provide the group with more liquidity.  For Fiscal Years 2016 & 2015, royalties and management fees paid to The Walt Disney Company were €75 million and €83 million, respectively.

For the financial year 2016, the net loss of the consolidated group increased to €858 million, compared with a net loss of €102 million for the previous year.  The Group drew €130 million under the €350 million standby revolving credit facility granted by The Walt Disney Company.

Due to the downfall of tourism industry in the region, which contributed to the deterioration in the Group’s operating results for 2016, the group tested the depreciation of all Term assets and determined that these assets had lost some of their value.

As a result, Euro Disney recorded an asset impairment charge of €565 million for the fiscal year 2016. This impairment of assets has no impact on the Group’s cash or cash flows.

The EBITDA loss amounted to €34 million after a positive result of €141 million in 2015. Operating expenses increased 5% to €0.52 billion, reflecting continued improvements in the proposed visitor experience, salaries and additional security costs.

Theme park revenues decreased 10% to €722 million, reflecting a 10% decline in theme park attendance. This decrease is attributable to a decrease in the number of visitors from all the Group’s key European markets.

Hotel and Disney Village revenues decreased by 4% to €505 million, reflecting a 2-point decrease in hotel occupancy, a 1% decrease in average spending per room and a 2% decrease in Disney Village turnover.

The resort is now €1.135 billion in debt.  Having already spent  €193 million improving the guest experience and refurbishing the resorts attractions in preparation for the upcoming celebration of 25th Anniversary next year their only hope is that visitor numbers start to increase next year.

A further reduction in visitor numbers next year and further increased losses will not be sustainable for a resort which was only rescued from closure in 2015.

The full press release for the 2016 results can be found here:
http://corporate.disneylandparis.com/CORP/EN/Neutral/Images/uk-2016-11-10-FY16-Press-release.pdf

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