SeaWorld reports fall in Q3 income, embarks on US$40m cost-cutting drive
SeaWorld Entertainment reported a 2 per cent decrease in revenue for the quarter year on year, with attendance at some parks affected by weather conditions and falling inward tourism from Latin America.
To counteract this, the company announced it would be launching a “comprehensive cost optimisation programme” to cut spending by US$65m (€59m, £52m), saving US$40m (€36m, £32m) by the end of 2018. Marketing initiatives such as early season pass sales, new pricing strategies and price increases on selected products are already being implemented.
“Overall, we are seeing indications of stabilisation, and we believe our results by the end of 2017 and beyond will materially benefit from our focus on significant cost reductions, our brand repositioning, our strategic marketing and pricing initiatives and our continued commitment to consistent and disciplined capital investments,” said SeaWorld CEO Joel Manby.
SeaWorld Entertainment reported revenues of US$485.3m (€439.2m, £391.4m), a decrease of US$11.6 million (2 per cent) compared to Q3 2015. The company reported net income of US$65.7m (€59.5m, £53m), compared to US$98m the year before. Quarterly dividends are now suspended since a $0.10 per share was paid on 29 September. The company says it needs more flexibility to spend on strategies that will ensure returns in the long term.
“One year into our three-year plan to increase value for our shareholders, we are delivering tangible results in key areas,” said Manby. “We are creating distinct guest experiences in our parks that reflect the fundamental repositioning of our brand from animal entertainment to experiences that matter. The introduction of several new exciting rides and attractions – including Mako and Cobra’s Curse – is driving attendance and season pass sales.”
September’s Hurricane Hermine and other adverse weather hit attendance at SeaWorld’s northeastern locations, alongside a decline of around 93,000 Latin American visitors compared to Q3 2015.
At the same time, attendance rose at SeaWorld San Antonio in Texas thanks to the opening of the second gate for its Aquatica waterpark. California attendance also strengthened while the decline in global tourism eased off slightly. Visitor numbers went up at SeaWorld Orlando, with 46,000 more than Q3 last year, due to new attractions at the park encouraging domestic guests to visit.
“Absent the decline in attendance from Latin America, which appears to be abating, Florida attendance would have increased 4 per cent in the third quarter,” Many said. “We have also announced an extensive line-up of new attractions, shows and events for 2017, displaying our disciplined capital allocation strategy, focusing on high-return, value-enhancing projects. We are using our capital more efficiently, introducing more new attractions with fewer dollars.”
SeaWorld said it predicts pre-tax earnings for 2016 of between US$310m and US$330m.
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