The bulk of the losses at the troubled Paris theme park were the result of a surprise Fr3.2bn exceptional charge. This stemmed from the company's decision to change its accounting policies to eliminate all its pre-opening costs at one go, instead of over the next 20 years.
The company said the change represented a more conservative accounting approach. It admitted that the impact would be to depress earnings this year, but boost them in future years.
Analysts viewed the shift as a 'deck-clearing' exercise, connected to Euro Disney's planned financial restructuring. But they gave the management, many of whom are new faces drafted in from Disney in the US, credit for facing up to the company's problems.
'I think the new management team is a lot more realistic about the difficulties,' said Rebecca Winnington-Ingram, of the broker Morgan Stanley.
Together with underlying trading losses of around Fr1.7bn for its first full year of operation, which were roughly as expected, the charge gave total losses of more than Fr5.3bn.
The news sent the shares into a tailspin, with trading suspended in Paris and Brussels, while in London the shares ended the day down 72p at 426p.
Philippe Bourguignon, the group's French president, blamed Euro Disney's problems on a number of factors. These included the much sharper-than-expected European recession, the strong French franc, the collapse of the Paris property market, rising unemployment and high interest rates.
He pointed out, for example, that the 18 per cent appreciation of the French franc against sterling compared with a year previously had led to a 32 per cent drop in the number of British visitors to France - more than 45 per cent of visitors to Euro Disneyland were now French.
The park, which has recorded more than 17 million visitors in its first 18 months of operation, is making considerable efforts to improve its financial position. It has tried to boost attendances by cutting prices, which it now acknowledges to have been too high, and by making the company more efficient.
Food, hotel costs and admission prices have been cut by about 20 per cent, and the group recently sacked more than 950 staff, producing annual savings of about Fr250m. Hotel occupancy rates have been raised to 55 per cent and a second theme park on the site has been shelved, possibly indefinitely.
But with about Fr20bn of debt, no further loan facilities, and mounting trading losses, the company admits it cannot be viable without a financial restructuring that will cut its debt levels.
'Short term we are not generating enough cash to even cover the debt servicing,' Stephen Burke, Euro Disney's American executive vice-president, said. 'If you are looking for a short-term solution, there isn't one. We have too much debt for the level of business we are doing, currently and in the near future.'
The park is being kept afloat by the US Walt Disney company, which owns 49 per cent and has agreed to meet its needs until next spring, by which time it hopes to have permanently restructured the park's finances.
It is in discussion with Euro Disney, the French government and the dozens of bankers owed money by the park about what shape such a rescue might take. However, neither Disney nor Euro Disney is prepared to comment on the options.
The American group, which also reported figures yesterday, was pushed into the red in the fourth quarter as a result of Euro Disney and the costs associated with bankrolling the company.
It lost dollars 77.8m in the fourth quarter, compared with a profit of more than dollars 224m last year. The figures included a dollars 350m charge for the park, reflecting Disney's share of Euro Disney's losses and provisions plus money necessary to keep the park afloat until the spring.
The group had other problems. Its film profits were down, falling more than 22 per cent to dollars 95m, but the consumer products division did well, pushing income up 18 per cent to dollars 71m. Total revenues in the quarter rose 5 per cent to dollars 2.2bn.
Full-year profits were dollars 299.8m, down from dollars 816.7m, despite higher revenues of dollars 8.5bn (dollars 7.5bn).
The US Walt Disney company said it would today discuss a proposed new project in Virginia. Press reports say it will be a park with an American history theme and a shopping complex on a rural site 30 miles outside Washington DC.
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