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Disney Q2 Earnings - Theme Parks make record profits, yet budget is cut and projects pushed back

Walt Disney World and all the Disney Theme Parks around the world continue to make huge amounts of money for Disney, but with Disney recording loses elsewhere in its business, the theme parks will still suffer cutbacks.


Disney Q2 Earnings

Disney have issued its quarterly financials, and overall, Disney have met Wall Street projections on the top and bottom lines, posting $21.82 in revenue and $0.93 earnings per share in the three-month period ending April, in line with consensus analyst estimates of $21.8 billion and $0.93, respectively, according to FactSet.


And yet again, the majority of Disney’s profits came from its theme parks division, posting $2.2 billion in net income in the unit, while its content made $1.1 billion.


For the domestic parks, revenues were $5.57 billion, an increase of 14%. Domestic year-over-year increases in attendance and per capita spending were 7% and 2% respectively.


While Disney Theme Parks make record profits, budgets are cut and projects pushed back

The biggest shock was the revelation that Disney has lost 4 million subscribers to the Disney+ streaming service, although losses at Disney+ appear to be slowing down, with a loss of $659 million last quarter, while still an eye watering figure, its the smallest loss in six quarters, down 26% from the last three months of 2022.


Disney also revealed the Hulu and Disney+ will soon be available in one app.


Disney Q2 Earnings

For theme park fans the biggest take is that Disney’s Parks, Experiences and Products division is the most important segment of Disney's overall business, driving sales and profit growth for Disney, so it seems unfair that there is going to be an apparent push back of projects in the theme parks...


In an earnings call, Disney CFO Christine McCarthy offered us an insight into Disney's planned capital expenditure figures going forward, and while only late last year Disney announced that they were planned on spending $6.7 billion in fiscal 2023, that figure is now being cut by around 16%.


McCarthy noted "We expect that fiscal 2023 capital expenditures will total approximately $5.6 billion. This is lower than our prior guide of $6 billion largely due to timing of projects at DPEP (Disney Parks, Experiences and Products) as well as lower technology spend at DMED."


While the cut is less than a billion, and in general expenditure projects gets cut every year at Disney, it's interesting to note here that McCarthy said that the cuts are in part due to timing of projects at the theme parks, currently there is many projects underway at Disney Parks around the world, including here in Orlando where the two major projects happening are the Splash Mountain re-theme and the completion of the EPCOT transformation, so should we expect these to be pushed back?


Well, McCarthy's comments do confirm a pushback on the timeframes for projects into fiscal 2024, which starts in October 2023. McCarthy didn’t say which projects may be pushed into 2024.


Disney have already announced that the EPCOT project, including World Celebration will be opening later this year. so we could see this open later than planned, or the pushback could affect Splash Mountains re-theme to Tiana’s Bayou Adventure, with the possibility that the re-opening gets delayed.


Disney Q2 Earnings

Also at the earning call today, it was interesting to see a slight less optimistic CEO Bob Iger when talking about splashing the cash on project at Walt Disney World.


Having previously stating that Disney is planning on spending $17 billion at Walt Disney World over the next 10 years, he asked “does the State want us to invest more…or not?” when discussing Florida Governor Ron DeSantis’ war against the company.


Iger commented that the state should welcome Disney’s investment while the company operates responsibility and pays its fair share.


During the call, Iger also reiterated the company’s position on the pending litigation against Gov. DeSantis and the Central Florida Tourism Oversight District board.


He denied claims from DeSantis that Disney were only trying to preserve their power at Reedy Creek, saying that the grounds of the case lie in the retaliation for speaking up as protected by the First Amendment.


Disney Q2 Earnings

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