Published on : Wednesday, May 6, 2020
The Walt Disney Company recently informed that it is currently facing nearly $1.4 billion hit during the first quarter of financial 2020 as a result of the COVID-19 pandemic. According to a recent statement by the company, the profits have fallen to $460 million over the period of the coronavirus crisis, which is almost a 91% drop as compared to the $5.4 billion recorded last year.
It was back in January that Disney closed down its park in Shanghai and Hong Kong. It was followed by the closure of theme parks in Tokyo around February and in the United States and France in March. All of its parks have been shut for an indefinite amount of time. Therefore, the company mentioned that its leisure operations had been effected in the worst possible way.
All operations of Disney cruise lines have been suspended until later in the year. Resorts and hotels operated by the company have also been closed down. In recent years, Disney’s parks and cruise division has been a reliable profit driver for the company. However, the sectors have become a financial liability in recent months.
The leisure business for the entertainment giant accounted for a total of $1 billion of the $1.4 billion hit to operating income. Although the company’s revenue rose 21% to $18 billion during the quarter, it was largely driven by the acquisition of parts of 21st Century Fox last year.
Bob Iger, Chairman, Walt Disney said in a statement that the firm was facing unprecedented challenges due to the global pandemic but he mentioned that he is confident about the recovery once the trying times pass.
Bob Chapek, Chief Executive, Walt Disney further added that the company has noticed encouraging signs of a gradual return to some semblance of normalcy in China. He mentioned that the firm is evaluating a number of different scenarios to ensure a cautious, sensible, and deliberate approach to the eventual reopening of our parks but the time frame of resuming full operations continues to be uncertain.
At present, Disney is planning to open its Shanghai Park on May 11 with proper health measures, such as masks and temperature checks. However, the timing of re-opening still remains unclear outside of Shanghai.