EuroBusiness Media (EBM): Euro Disney, the number one tourist destination in Europe, reports full-year results for 2013. Mark Stead welcome, you are the CFO of Euro Disney. How would you sum up your full-year results for 2013?
Mark Stead: I think I’d sum them up using four words starting with a “p”. I think we were pertinent in our strategic choices this year. I think we were prudent in the way we managed our business. I think we performed well on a number of fronts. And all of this leaves me positive for the short, medium and long term of Disneyland Paris. Let me explain that. Pertinent in our strategic choices. That starts with the renovation of our park for our 20th anniversary and 3 hotels renovated out of 7. The Disney Dreams! show that entered into our park and reached record satisfaction numbers, as well as a number of prizes won worldwide. We also decided last year to refinance our debt; that saved us over €25 million of interest charges and tax savings this year. So, we have been very pertinent in our strategic choices over the long term. I think we performed well and we were prudent in the way we managed our business. Overall, cost growth this year was only 1%, in line with inflation. If we consider the cost growth for our parks and our resort, the increase was limited to 0.3%. That passes by redefining how we manage our park and how we offer services to our guests. Take, for example, our restaurants. What we decided to do this year was to close some of our restaurants that had fewer numbers of people in them at certain times of the day to move our cast members to parts of the park where we needed them most. And that helped us to manage our cost growth down to a very low level this year.
I think as well that we performed well on a number of fronts. We shifted our marketing and sales towards that part of Europe that’s working well, like Germany, Eastern Europe, and the United Kingdom. In the UK, we saw revenue growth of 9% this year. We decided as well to reposition our park as an exceptional destination for our local French market. That decision was taken on the back of years of very heavy investments in our park which has increased guest satisfaction and guest spending. If I can give you an example of the increased guest spending, we just finished the renovation of our Santa Fé hotel. We’ve already seen guest spending increase 19%, and guest satisfaction is up 8%. So, all of these elements leave me very positive for the short, medium and long term of Disneyland Paris.
EBM: Your attendance went down 1 million. Shouldn’t your investors be worried?
Mark Stead: No, I don’t think our investors should be worried with this drop in attendance. Let me explain it to you. Firstly, about a third of our attendance comes from Southern Europe: Spain and Italy in difficult economic situations. The two thirds of this drop in attendance that we’ve seen of 1 million comes from the French market. And most of that drop in attendance is from our local French market. Given our heavy investments over the last five years in the guest satisfaction to increase the quality of our resort, we decided to reduce, for our local market, a number of our heavily discounted offers to, in fact, reposition our park as an exceptional destination. The drop in attendance from our local market, in terms of revenues, was compensated by about 73,000 guests coming from other markets. So, I think this was the right choice.
EBM: A loss of €78 million is a lot, even though slightly down compared to last year. How can you continue to invest while losing money? That seems a bit counterintuitive…
Mark Stead: I think the response to this question comes in two elements. Firstly, the amount of cash that we generate from our operations. In fact, our operations generated this year about €95 million of cash, and this is cash that we can use to invest in the quality of our installations, to increase guest satisfaction, and hence gain spending, which is an integral part of our strategy.
If you look at our accounting result, a loss of €78 million, in that accounting result is an accounting charge for the use of our assets, depreciation and amortisation. If you reintegrate that accounting charge into our net loss, in fact you get to a number of about €94 million, which is equivalent to our cash result, again, the cash that we used to invest in our business.
EBM: And finally, what are you expecting for 2014?
Mark Stead: I think for 2014, when we look at our key markets, we’re expecting a number of things. From Southern Europe, we are expecting an improvement in the performance. In France, we are expecting a stabilisation, even a small improvement. And we are expecting an outperformance, or an overperformance, from the UK and Eastern Europe. We are also this year opening Ratatouille in the Walt Disney Studios Park. It’s our next big attraction. So, I think this year is going to be a big year for Disneyland Paris, and I think we can expect some positive things.
Mark Stead, CFO of Euro Disney, thank you very much.
Mark Stead: Thank you.
