SHARES: BLUE CHIP: Spell fading at Magic Kingdom

Euro Disney's improvement this year is flattered by comparisons with 1994, many analysts believe

ANYONE who followed this newspaper's advice to buy shares in Euro Disney at the turn of the year at 136p should be celebrating the theme park's first profits, announced last week. The company is now expected to return to the black in the current year, 12 months ahead of schedule.

The shares gained 9p to end the week at 220p, representing an 84p gain in just over six months. The price is still a long way from the 707p at which the shares were floated in 1989. Since the park opened in 1992, shareholders have experienced not so much a roller-coaster ride as a headlong flight through the chamber of horrors.

None of Mickey Mouse's movies ever went beyond budget the way the park's building costs did. Fifteen shades of pink paint were rumoured to have been tried in order to make the Magic Castle stand out from the fog and mud of France's Marne Valley, previously best known for hosting some of the messier episodes of the First World War. Determined to cut a better deal than Disney had in Tokyo, the company loaded the park with debt just as French interest rates rose to prop up the franc against the mark, and then recession hit Europe.

That made admission costs look extortionate in sterling terms, and even the French and Germans drew the line at the pounds 2 ice-creams and pounds 30 sweatshirts. Catering and souvenirs were supposed to be big earners, but it was standing- room only at the fountains, where the drinking water was free. Meanwhile, a trip to Disneyland in Florida or Britain's Alton Towers looked relatively cheap.

Claims that Euro Disney would be not so much a cultural Chernobyl as a cultural Vietnam proved wide of the mark, however. Unlike the US in Saigon, Disney could not stand the damage to its good name that would have followed a humiliating evacuation from the Marne. So it temporarily gave up some of its royalties, the bank debt was re- scheduled, and a pounds 725m rights issue in June last year at FFr10 (120p) was backed by one of Saudi Arabia's more successful entrepreneurs, Prince al-Waleed bin Talal bin Abdulaziz, giving him up to 25 per cent of the company.

Admissions fell by 10 per cent during the course of the year, but a cut of more than 20 per cent in ticket prices has boosted revenue in the first half of 1995. Against a background of a much improved European economic outlook, the company last week reported net profits of FFr170m for the three months to June, with a 17 per cent rise in visitor numbers - though that is flattered by the fact that bookings last year were hard-hit by fears that the park would close. At 220p, the share price is no longer saying the gates will slam on the Magic Kingdom, and indeed they are unlikely to do so.

However, many of the original problems remain. Admission and hamburger prices can be cut, but the company's FFr16bn of debt cannot. Euro Disney is currently benefiting from the interest-rate moratorium agreed as part of last year's restructuring. This is currently worth about FFr600m a year, but declines in value to virtually nothing by 1998, after which the interest margins are due to increase. Disney's hefty management fees also return from 1998. Admissions of 10 million this year will also be boosted by the opening of the FFr750m-plus Space Mountain. The company cannot afford any more big eye-catching attractions for a while.

"Just to compensate for the end of the interest-rate and management-fee moratoriums, we need to see admissions up to 12.5 million by 1997," says Geoff Simmons at the distressed-debt trader Klesch & Company, a previous and potential buyer of Euro Disney bonds. And he notes the potential competition from Sega's Games City in London and Port Aventura in Spain. Also, a new theme park will open in Dusseldorf next year.

Equity analysts are cautious about the shares. Few in London follow the stock, as most of the trading is in Paris. "I struggle to find a single institutional investor in the shares," says Nigel Reed at the French bank Paribas. "Most are held by Disney, Prince al-Waleed and small French investors, although there are perhaps several tens of thousands of private British shareholders."

He believes the market has failed to see how comparisons with last year flatter both admission figures and the bottom line figure after tax and exceptionals. It is time to wave Mickey and chums goodbye.

Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Lewis Hamilton walks back to the pit lane with his Mercedes burning in the background
Formula 1
Arts and Entertainment
The new characters were announced yesterday at San Diego Comic Con
comic-con 2014
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
Bryan had a bracelet given to him by his late father stolen during the raid
A rub on the tummy sprang Casey back to life
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
ebookA unique anthology of reporting and analysis of a crucial period of history
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
Tovey says of homeless charity the Pillion Trust : 'If it weren't for them and the park attendant I wouldn't be here today.'
Rhys Williams
commonwealth games
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

The benefits of being in Recruitment at SThree...

£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...

Test Analyst - UAT - Credit Risk

£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little