Details On Disney’s Third Quarter Results

The Walt Disney Company have released financial details on their third quarter which ended on June 27, 2015 and overall the company’s revenue rose 5% to $13.1 billion.   While the poor performance of the Tomorrowland movie hit profits, the Avengers: Age of Ultron movie helped increase the film studios profits.

The Parks division also increased 13% with higher attendance at the Walt Disney World, Disneyland and Disneyland Paris, even with larger running costs and the cost of building the new Shanghai Disneyland Park.

Merchandise sales were also up, building off the success of the Avengers plus having brands like Spider-Man and Frozen still being popular.  While Disney Interactive saw a big dip with lower sales of Disney Infinity 2.0.

 

Here is a rundown of each division:

Parks and Resorts

Parks and Resorts revenues for the quarter increased 4% to $4.1 billion and segment operating income increased 9% to $922 million. Operating income growth for the quarter was due to an increase at our domestic operations, partially offset by a decrease at our international operations.

Higher operating income at our domestic operations was primarily due to volume and guest spending growth, partially offset by higher costs. The increase in volumes was due to attendance growth at our theme parks and higher occupied room nights at Walt Disney World Resort and our Aulani resort in Hawaii. Guest spending growth was due to higher food, beverage, and merchandise spending, increases in average ticket prices at our cruise line and Disneyland Resort and higher average hotel room rates. Cost increases were due to labor and other cost inflation, costs for the 60th Anniversary celebration at Disneyland Resort and higher pension and post-retirement medical costs, partially offset by lower marketing costs at Walt Disney World Resort.

Lower operating income at our international operations was due to lower attendance and occupied room nights at Hong Kong Disneyland Resort, higher operating costs at Disneyland Paris and Hong Kong Disneyland Resort, and higher pre-opening expenses at Shanghai Disney Resort. These decreases were partially offset by higher average ticket prices, increased food, beverage and merchandise spending and higher volumes at Disneyland Paris.

Studio Entertainment

Studio Entertainment revenues for the quarter increased 13% to $2.0 billion and segment operating income increased 15% to $472 million. Higher operating income was due to an increase in theatrical distribution, growth at international television distribution and a higher revenue share with the Consumer Products segment. These increases were partially offset by a decrease in home entertainment and higher film cost impairments.

The increase in theatrical distribution reflected the strong performance of Marvel’s Avengers: Age of Ultron in the current quarter compared to Marvel’s Captain America: The Winter Soldier in the prior-year quarter. Theatrical results in the current quarter also benefited from the continuing performance of Cinderella, which was released in the second quarter of the current year. These increases were partially offset by the strong international performance of Frozen in the prior-year quarter and the results of Tomorrowland in the current quarter. The growth in international television distribution included sales of Star Wars titles, while the increased Consumer Products revenue share was primarily due to the performance of Frozen merchandise. The decrease at home entertainment reflected lower unit sales due to the performance of Frozen in the prior-year quarter compared to Big Hero 6 in the current quarter.

Consumer Products

Consumer Products revenues for the quarter increased 6% to $954 million and segment operating income increased 27% to $348 million. Higher operating income was due to an increase in merchandise licensing revenues and lower third-party royalty expense. Merchandise Licensing revenue growth reflected the performance of merchandise based on Frozen, The Avengers and Star Wars, partially offset by lower revenues from Spider-Man merchandise.

Interactive

Interactive revenues for the quarter decreased by $58 million to $208 million and segment operating income decreased by $29 million to break-even.

Lower operating income was primarily due to lower results from Disney Infinity and decreased sales of console game catalog titles, partially offset by the continued success of Tsum Tsum. The decrease from Disney Infinity was due to decreased unit sales and lower average net effective pricing.

 

What do you think of these results?