Less than a week after unwinding its loss making adventures in Hollywood, Village Roadshow (VRL) saw its shares drop to new four year lows on Monday after it warned that already weak visitor numbers to its theme parks, especially on the Gold Coast, had been further hit by Tropical Cyclone Debbie.
Visitor numbers were already lower at Village Roadshow’s Gold Coast parks (Movieworld, Wet n’ Wild) following last year’s fatal accident at rival Ardent Leisure’s Dreamworld, and the company on Monday told the ASX they were now down 9.4% for the nine months to March 31.
Village also told the market that membership renewals had declined, and that its Wet’n’Wild park in Sydney was expected to perform even less well in the second half than during its first half in which it lost $1.9 million before tax.
As a result, the company told investors it now expects earnings before interest, tax, depreciation and amortisation (EBITDA) from its theme park division of between $55 million and $65 million, down from $88 million in 2015-16.
That fall could be as more than 37% at the bottom of the guidance range. For the group as a whole that fall will see Village incur a second half loss.
Investors took fright, sending the shares down 14% at one stage to a more than four year intra day low of $3.43. The shares later recovered some of their poise to close the session down 6.5% at $3.75. The last time the shares were at this level was back in late 2012.
"VRL firmly believes that the theme parks division will return to normal levels over time following key marketing campaigns and the introduction of new attractions," Village Roadshow said in a statement to the ASX.
Village Roadshow has also had problems at its film distribution unit in Hollywood, now converted to just a passive investment. That was after the company had revealed at its February interim profit announcement that the film making adventure was too costly and the company needed to get rid of the urden, which it did last week.
Village Roadshow Limited lost $5.7 million in the first half of 2016-17, compared to a post-tax loss of $2.8 million in the previous corresponding period.
The board noted at its half-year results that a net debt to earnings ratio of 3.27 was "unacceptable" and suspended dividends. The company has $1.1 billion of current and future liabilities, including nearly $640 million of loans. Its major assets are $690 million of plant and equipment (the theme parks mostly and some cinemas and $384 million in goodwill).
