Village Roadshow theme parks boost group profits

Village Roadshow's Gold Coast theme parks Sea World and Warners Bros. Movie World and the Wet'n'Wild Gold Coast waterpark helped boost the entertainment giant’s financial performance for the half year to the end of December 2015.

While a cold spring and wet December and January hit Village's Wet'n'Wild Sydney waterpark, its theme park division increased profit to $44.5 million in the first half.

Commenting on the result, Citi Research analyst Sam Teeger explained "Village's theme parks remain well placed to benefit from a resurgence in Gold Coast tourism."

In other operations, Village is predicting a record year for its cinema business while also testing copyright laws in an upcoming action in the Australian Federal Court to have internet service providers block piracy website Solarmovie.

Village Roadshow is expecting its film business to have a record full-year result on the back of a strong line-up including Star Wars: The Force Awakens, Deadpool and Captain America: Civil War.

Overall, Village recorded a net loss of $3.5 million while revenues increased 11.5% in the first half to $523.5 million.

Excluding significant items, Village reported a net profit of $22 million, up 45.1% on the first half of the 2015 financial year. The result was marginally above Citi forecasts of $21.9 million.

The group's cinema business reported earnings before interest, tax, depreciation and amortisation of $37.6 million, up from $26.2 million in the previous corresponding period.

While Village said it expected the full 2016 financial year to be a record in cinema, it did not expect the second half to keep pace with the first six months given the timing of new movie releases.

Teeger further explained “assuming the rate of EBITDA decline in 1H16 continues at the same pace in 2H16, implies a FY16 film distribution EBITDA of $26 million.”

He added “while Village has delivered a strong 1H16 result, we would like to learn more about the strategy surrounding cinema premiumisation, which if executed successfully, has the potential to drive earnings growth regardless of the film slate.”

Village said it did not have the complex technological and social issues that confronted many sectors and was optimistic that bad weather would not plague its Wet'n'Wild Sydney next year.

Images: Wet'n'Wild Gold Coast (top) and the Wild Wild West ride at Warner Bros. Movie World (below).

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