Gold Coast's theme parks can't catch a break
21 February 2020, Written by David Simmons
Australia's theme park hub has experienced a rough start to 2020 just as the sector was showing signs of recovery.
The two companies that run the Gold Coast's theme parks, Ardent Leisure (ASX: ALG) and Village Roadshow (ASX: VRL), have both been impacted by a hot January, a stormy February and a virus outbreak.
For Ardent Leisure, the ongoing and mostly uncontrollable impacts of local flooding, the national bushfire crisis and the coronavirus Covid-19 comes just as it was beginning to get back on its feet after the Dreamworld tragedy of 2016.
In its 1H20 results, posted this morning, Ardent saw its theme park revenue improve by $4.3 million, driven by a 2.9 per cent uplift in attendance.
This rise in visitor numbers is a result of the company launching a new attraction Sky Voyager in August. The ride is now the most popular attraction at its Dreamworld theme park.
The theme park division, which in addition to Dreamworld includes theme parks WhiteWater World and Gold Coast observation deck SkyPoint, has recently overcome the long-lasting effects of a coronial inquest into the tragedy at Dreamworld.
Park attendance was severely impacted after four died tragically on the Thunder River Rapids ride in 2016. The tragedy had a chilling effect on not just Dreamworld, but the Gold Coast theme park sector as a whole.
But Ardent Leisure's efforts to rehabilitate the division have been knocked down once again at the very beginning of 2H20, meaning Dreamworld is unlikely to break even this year.
"Trading during the Christmas holidays was the strongest it has been for many years," says Ardent Leisure.
"However, a prolonged period of severe wet weather, the Coronavirus, and potential impact on attendances from the Coroner's Report means that it is unlikely Dreamworld will break even in 2H20."
"Management believe these challenges are temporary and remain focussed on successfully executing planned investments and initiatives."
Competitor Village Roadshow also posted its 1H20 results today, demonstrating a similar predicted impact in the second half to its own theme parks division.
In 1H20 VRL's theme parks division, which includes Gold Coast theme parks Warner Bros. Movie World, Sea World, Wet'n'Wild, and others, saw improved profitability, ticket sales and attendance growth.
However, the bushfires, two days of closure due to flooding, and the effect of international tourists not visiting its parks will have an EBITDA impact of around $3 million in 2H20.
Overall, Village Roadshow, which also produces and distributes movies, saw its 1H19 profit of $2.4 million turn into a $25.8 million net loss after tax in 1H20.
This loss is largely due to impairments of its assets totalling $39.7 million.
Shares in VRL are down 3.04 per cent to $3.83 per share at 11.50am AEDT, while shares in ALG are down 8.11 per cent to $1.25 per share.
Business News Australia
Author: David Simmons