New York (AFP) – Disney shares jumped in pre-market trading Wednesday as the entertainment giant reported better than expected revenues and profits, thanks in part to growth in its streaming business. Newly installed CEO Josh D’Amaro described demand at the company’s US amusement parks as “healthy,” but said the company is “mindful of the macroeconomic uncertainty consumers are facing today,” according to a letter to shareholders also signed by Chief Financial Officer Hugh Johnston.
Profits in Disney’s second quarter ending March 28 were $2.5 billion, down 27 percent from the year-ago level while revenues rose 6.5 percent to $25.12 billion. The results translated into $1.57 per share compared with analyst forecasts for $1.50 per share. Disney in February named D’Amaro, then the parks chief, as CEO to replace long-term chief Bob Iger.
During a conference call with analysts, D’Amaro said his long-term goals include strengthening the links between streaming and experiences. “In the long term what you’ll see is those pieces increasingly connected,” leading to growth, said D’Amaro. A standout in the period was Disney’s streaming division, which saw revenues surge 14 percent to $7.8 billion. Disney also pointed to strength in theatrical movies, particularly “Avatar: Fire and Ash,” “Zootopia 2,” and “Hoppers.”
Disney’s parks division scored higher operating profit on increased guest spending at theme parks and on the launch of new cruise ships that sail the Caribbean and Southeast Asia. However, these launches also resulted in higher costs, which was also a factor in Disney’s entertainment and sports divisions.
In their shareholder letter, D’Amaro and Johnston highlighted investments in Disney+ and sports network ESPN, while also pointing to efforts to grow its presence in pursuits such as gaming, “areas that are not yet significant revenue drivers but are strategically important.” The company is pressing on in efforts to build a new cruise ship to Japan and a theme park resort in Abu Dhabi, saying of the latter, “the strategic logic of our Abu Dhabi plans is unchanged.”
In an earnings conference call with analysts, Johnston said the company hasn’t seen impact on consumer behavior from higher gasoline prices so far. But “we’re not immune to the packages, including how a significant further rise in fuel prices from current levels could eventually lead to changes in consumer behavior,” Johnston said, adding that Disney’s businesses have “levers” to pull if this scenario unfolds. Shares were up 6.6 percent in pre-market trading after earlier rising more than seven percent.
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