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Coronavirus Hit To Disney’s Business At $1.4 Billion, Shanghai Park To Reopen


05/06/2020


Coronavirus Hit To Disney’s Business At $1.4 Billion, Shanghai Park To Reopen
Walt Disney has predicted that the containment measures imposed by various governments to control the novel coronavirus pandemic will cut its profits by $1.4 billion. The loss to revenues and hence profits were primarily because of its closed down theme parks.
 
The company however said that its Shanghai Disneyland is expected to reopen next week even though the company is expecting a much lower number of visitors to the park.
 
"In total, we estimate that the COVID-19 impacts on our current quarter income from continuing operations before income taxes across all of our businesses were as much as $1.4 billion," Disney said. Losses incurred from the theme parks accounted for about $1 billion of the toal losses, the company added.
 
No dividend will be paid by the company for the first half of the fiscal year, Disney said, and added that it will preserve $1.6 billion in cash as a result of saving – calculated of the basis of the dividend payable by the company kept constant at 88 cents per share.
 
The announcement by the company resulted in a 2 per cent drop in the stock price of the company at $98.68. So far this year, the stocks of the company had lost more than one-quarter of their value.
 
Analysts expect that Disney’s performance will take a larger hit in the current quarter. No financial forecast for the rest of the year was provided by Disney because of the uncertainty of the economic situation.
 
According a filing with securities regulators, a host of cost cutting measures have been undertaken by the company already which included furloughing about 120,000 of its employees. The company has slashed salaries of many of its executives.
 
"I have absolute confidence in our ability to get through this challenging period and recover successfully," said Executive Chairman Bob Iger, who stepped down as CEO in February.
 
The streaming service the company that was launched in November, Disney+, has however got traction during the pandemic as people were forced to stay back home because of lockdown orders. As of May 04, there were 54.5 million paying subscribers of Disney+ compared to 50 million members of the service as on April 8.
 
Large investments are being made by the company to build its direct-to-consumer services and international unit, which includes Disney+. In the latest ended quarter, the division of Disney+ had lost $812 million compared to analysts’ expectations of loss of $861 million.
 
There was a 58 per cent year on year fall in the operating income for the parks, experiences and products division of the company which came in at $639 million.
 
However profit of $2.4 billion was reported for the company’s media networks business, which includes ESPN and broadcaster ABC, for the most recent quarter.
 
On the overall however, there was a 21 per cent increase in revenue for the quarter which came in at $18 billion which was slightly higher than estimate of analysts at $17.8 billion.
 
The company said that there was no time frame when the amusement parks of Disney in Asia, apart from its Shanghai park, the United States and France would again reopen.
 
(Source:www.cgtn.com)