Walt Disney Co Q1 2016 Earnings Results

The Walt Disney Company reported their earnings today for the first quarter (Q1) of 2016 which ended on January 2, 2016.  According to Bob Iger, The Walt Disney Company highest quarterly earrings in company history was “driven by the phenomenal success of Star Wars.” The global success of Star Wars: The Force Awakens drove quarterly operating income at the Studio Entertainment up 86% and Consumer Products & Interactive Media up 23%. Iger went on to say Disney is very pleased with the results which “validate our strategic focus and investments in brands and franchisees to drive long-term growth across the entire company.”

The Walt Disney Company reported record quarterly earnings of $2.9 billion for its first fiscal quarter compared to $2.2 billion for the prior-year quarter. Diluted earnings per share (EPS) for the quarter increased 36% to $1.73 from $1.27 in the prior-year quarter. Excluding certain items affecting comparability, EPS for the quarter increased 28% to $1.63.

The Parks and Resorts segment (which includes Disney Cruise Line) saw revenue increase for the quarter 9% to $4.3 billion with income up 22% to $981 million. The income growth was primary driven by domestic operations and partially offset by a decrease at international operations. Parks and Resorts benefited from the New Year’s holiday which last year fell into the second quarter.

Higher income domestically was due to guest spending and attendance growth, partially offset by higher costs. The increase in guest spending was due to higher average ticket prices at our theme parks and cruise line, increased food, beverage and merchandise spending and higher average hotel room rates. Cost increases were due to labor and other cost inflation, new guest offerings, higher depreciation associated with new attractions at Walt Disney World Resort and expenses incurred for the dry-dock of the Disney Dream in the current quarter.

Lower operating income at our international operations was due to higher operating costs and lower attendance at Disneyland Paris as well as higher pre-opening expenses at Shanghai Disney Resort. Results at Disneyland Paris were impacted by the closure of the park for four days in November 2015.

During the earnings conference call, Tom Staggs mentioned that this is the best Q1 ever for Disney Cruise Line. It is not all that often DCL gets a mention. With the increase in fares and continued trimming of the fat it is not a surprise. Later in the conference call, it was noted that DCL’s record Q1 was driven my increased fares and increase onboard guest spending. It can only make one wonder if they have been focused on building a pile of cash to build new ships or is that just a foolish wish or something to believe in. Alternatively, they could be paying for recent dry docks on the Disney Magic and Disney Dream and the upcoming dry dock for the Disney Fantasy and the expected major refit of the Disney Wonder.

For more information and an overall report click over to the Q1-2016 Earnings Report.

10 thoughts on “Walt Disney Co Q1 2016 Earnings Results

  1. Anne

    Wow, thanks for the report. That is hard to swallow to read that in black and white. This probably means they will never stop increasing prices as they surely feel very happy with their strategy right now.

    Really annoyed with the fact that as you mentioned, there is no sign either of investment to actually offer guests something new or better for their buck.

    Reply
    1. Chad

      DCL will increase fares gradually until the ships start sailing with empty cabins. Until then, they have no incentive to stop.

      Reply
  2. R. Vashko

    At this pace, DCL will eventually price enough people out of the market where bookings will decline and/or start to skew heavily toward the shorter cruises.

    If DCL becomes aware that they pushed too hard on the pricing, I highly doubt they would outright lower fares. Rather, I would bet that they disguise the fare reductions as something “magical” like the reintroduction of Kids Sail Free or a higher OBB discount.

    Reply
    1. Scott Sanders Post author

      The fact is they are pricing people out. However, they are attracting people with deeper pockets that have no problem paying these fares which in turn results in increased onboard spending. This isn’t the case for everyone onboard. From my perspective, I see Disney is getting the people showing up, but by increasing the initial cost they are finding a demographic that is willing to spend even more once onboard the ships or in the parks.

      Quarter after quarter they always mention higher ticket prices and increase guest spending once on property in their earnings reports. The real money to Disney is the onsite/onboard spending due to the premium markup on food, beverage and merchandise.

      Reply
  3. Kate

    We have sailed with DCL for the last three years, but with continued fare increases and a low Canadian dollar it is looking out of reach for this year. I wonder how many other Canadians will be put off by the current costs.

    Reply
  4. Malcolm

    It is really sad how much they’ve raised rates/lowered offerings just in the two years I’ve cruised with DCL. I am not opposed to paying more for the increased value, but as they take things away I am just not seeing it as much.

    I priced a 9 day awesome sounding cruise with a balcony on another line. It was around $3k. That was also the same price as a 4 day interior room with DCL. And honestly, I prefer the kids program on the other line. DCL just throws all the kids into a room, and it is chaotic. The other line first separates 2-5 and 6-12 and has more activities and interaction.

    Reply

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