Village Roadshow Ltd's (ASX: VRL) first-half results disappointingly came in lower due to unseasonably heavy rain during the peak holiday season period, as well as from an imbalanced scheduling of big movie release dates during the period.
The company operates theme parks domestically and overseas such as Warner Brothers Movie World, Sea World and Wet'n'Wild. The biggest customer visitation season between November and January experienced much higher amounts of rainfall and almost double the number of rainy days at its Queensland theme parks compared to the first half of financial year 2014.
The Sydney Wet'n'Wild park, one of Village Roadshow's newest venues, was expected to have a strong Christmas holiday season. However, new attractions and special events were no match for one of the wettest summers in decades.
For the company's cinema exhibition, film distribution and production businesses, first-half cinema income was slightly higher in Australia, but earnings were a little down. A large number of expected big movie releases are skewed toward the second half, so film attendance is projected to be higher in that period.
Here are the half-year results highlights:
Revenue $480.1 million, down 1.7% from $488.4 million
Earnings before interest, tax, depreciation and amortisation (EBITDA) $69.2 million, down 15.1% from $81.5 million
Net profit after tax (NPAT) an attributable NPAT of $13.3 million, down 26.5% from $18.1 million
Earnings per share 8.3 cents per share, down 25.9% from 11.2 cps
Dividend per share an interim dividend of 14 cents per share fully franked, up from 13 cps
Village Roadshow's business performance looks to be a tale of two halves. The second half looks to be more promising for movie revenues with movies like Mad Max: Fury Road, Jupiter Ascending, Fifty Shades of Grey and In the Heart of the Sea.
Also, to help offset the poor holiday season theme park attendance, the company is heavily promoting special shows and attractions for the Easter holiday season.
Overall Village Roadshow expects full-year underlying attributable net profit for the group to be around $46 million – $52 million. That range is lower than the financial year 2014 full-year NPAT of $56.5 million.
Sometimes business comes in waves or is delayed. A half-year result may be disappointing, but Foolish investors need to look at the long-term growth. If the company fundamentals are still sound, an occasional slip in business can actually be an opportunity to pick up shares in a good company at a discount.
Village Roadshow is forecast to grow earnings an average 8.7% annually over the next few years. The stock pays a healthy 4.3% yield fully franked, so it could give a decent overall return for dividend investors.
