At last, Euro Disney thrills with profit

NIGEL COPE

It has not exactly been the fastest or smoothest of fairground rides but it has never lacked adventure. Euro Disney, the debt-ridden French theme park, has finally reported its first profit since opening in 1992.

After a long line of lifeboat reconstructions, rights issues and even the intervention of a Saudi prince, Euro Disney yesterday reported a profit of Fr170m (pounds 22.4m) for the three months to June - although critics said the underlying picture remained bleak. The company expects to break even over the financial year to September, a year ahead of its target.

Its latest attraction, which is boosting box office takings, is the pounds 65m Space Mountain, a 50mph roller-coaster ride that fires sensation-seekers "from the earth to the moon" through a galaxy of meteorites, planets and falling stars. This opened earlier this month and is expected to attract an additional 500,000 visitors to Euro Disney a year. As a spokesman said: "It turns you upside down, inside out, everything. I've been on it 11 times."

In the three months to June, Euro Disney saw operating revenues from the theme park and hotels rise by 17 per cent to Fr1.3bn. The profit of Fr170m compares with a Fr546m loss in the same period last year. Attendances are up 20 per cent after the park cut entrance prices by a similar amount. Spending per head in the park has also increased. Profits have been boosted by cost-cutting, the opening of 11 new attractionsand April's cut in ticket prices.

Euro Disney shares rose by 10 per cent to 232p on the news, but some City analysts warned against an over-optimistic response to the figures, pointing out that the company still had debts of around Fr5bn. Euro Disney's chairman, Philippe Bourguignon, admitted that "a lot still has to be done" to improve Euro Disney's financial situation. He added that break-even will "depend on the rest of the summer."

Nigel Reed, analyst at Paribas Capital Markets, said: "We should see reasonable figures next year but after that progress will be slow. The backdrop is different from the headline numbers." The 17 per cent increase in revenues compared with last year, when visitor numbers were suppressed by stories that the theme park was set to close.

Mr Reed now forecasts that Euro Disney will make Fr205m profit for the full year but warns that it will have to boost revenues by more than 40 per cent to justify its current share price.