Walt Disney Co. posted a loss in the second quarter due to restructuring and impairment charges, but adjusted profit beat expectations and its streaming business turned a profit. Theme parks also continued to perform well and the company raised its outlook for the year.
While Disney said on Tuesday that its overall streaming business would be weaker in the current quarter due to its streaming service in India, Disney+Hotstar, the company still expects its combined streaming businesses to be profitable in the fourth quarter will be a significant future growth driver for the company, with further improvements in profitability in the 2025 financial year.
Disney+’s core subscriber count rose more than 6% in the second quarter.
“When looking at our company as a whole, it is clear that the turnaround and growth initiatives we initiated over the last year have continued to deliver positive results,” CEO Bob Iger said in a prepared statement.
It’s the first financial report since shareholders last month rejected activist investor Nelson Peltz’s efforts to win a seat on the company’s board. He stands firmly behind Iger as he tries to strengthen the House of Mouse.
Domestic Disney theme park revenue rose 7%, while overseas Disney theme parks reported a 29% increase.
However, Disney admitted that it struggled with higher costs at its theme parks during the quarter due to inflation.
The company said guest spending at Walt Disney World increased due to higher ticket prices, while Disneyland guest spending increased due to increased ticket prices and hotel room prices.
Overseas, Hong Kong Disneyland benefited from the opening of World of Frozen, a part of the park that includes rides based on the popular “Frozen” films, in November.
In the period ended March 30, Disney lost $20 million, or a penny per share. That compares with profit of $1.27 billion, or 69 cents per share, a year ago.
Restructuring and impairment charges increased to $2.05 billion from $152 million in the year-earlier period.
Adjusted earnings, which exclude fees and other items, were $1.21 per share, well above the $1.12 per share that analysts surveyed by Zacks Investment Research had forecast.
Disney said that based on its second-quarter performance, the company now has a full-year adjusted earnings per share growth target of 25%. So far, growth of at least 20% has been forecast.
The Burbank, California-based company’s revenue rose to $22.08 billion from $21.82 billion a year earlier, but was slightly below Wall Street estimates of $22.13 billion.
Shares fell 6% before the market opened.
In February, Walt Disney Co. said it was making “significant cost reductions” and reduced its selling, general and other operating expenses by $500 million in the first quarter. The company cut thousands of jobs in 2023.
In March, Gov. Ron DeSantis’s allies and Disney reached an agreement in a state court dispute over how Walt Disney World will evolve after Florida’s governor took control of the theme park resort.
Last month, cast members at Disneyland in California and the union that organizes them, the Actors’ Equity Association, said they had filed a petition for union recognition.