Euro Disney improves but doubts remain

Leisure analysts yesterday declined to rule out another financial restructuring for Euro Disney, despite the owner of the Paris theme park reporting a sharp reduction in first-quarter losses.

Euro Disney's share price, which has been weak recently mainly because of selling ahead of the stock's removal from France's leading CAC-40 index, rose 5p to 124p on news that losses for the three months to December had dropped 80 per cent to Fr109m (£13m).

The company did not detail how much of the reduction stemmed from last summer's Fr13bn financial restructuring, put together by French and international banks as well as by Walt Disney, the parent company. It also did not disclose attendance levels, precise figures on how much people spent at Disneyland Paris hotels, or how much merchandise or food they bought at the park.

Operating revenues showed a rise from Fr828m to Fr854m. Attendance at the park and occupancy levels in the hotels improved, but were largely offset by reduced spending by guests due mainly to lower hotel prices implemented in January 1994, the company said.

Phillippe Bourguignon, chairman, of Euro Disney, said: "Although we still have a lot of work to do, we are very encouraged by these results."

Nigel Reed, leisure analyst at Paribas, attributed much of the loss reduction to the interest waiver currently enjoyed by Euro Disney. He was unable to determine how much of this year's Fr600m cut in interest payments fell in the first quarter.

Assuming a pro rata cut in interest payments of Fr150m, the company appeared to be making "a move in the right direction", he said.

Euro Disney had reduced costs and increased sales by about 3 per cent in the first quarter, and was expecting to see an overall sales increase this year of around 14.5 per cent, Mr Reed added.

Analysts also expect Euro Disney to move into profit in the second half of 1994/95, which should see a cut in total operating losses to Fr87m.

Mr Reed said that a further restructuring might be needed, and that the opening of a large Spanish park in April this year could harm future results.