Ardent Leisure Group in recovery mode but growth impacted by ‘economic headwinds’

Theme park operator Ardent Leisure’s recovery from a disastrous period continues but it warns of the effect of economic headwinds.

As interest rate pressures bite, the owner of the Dreamworld theme park in Queensland has warned of slower growth in the face of economic headwinds.

Ardent Leisure Group said while more people attended their parks and attractions in the financial year as the ASX-listed company climbed out of the Covid-19 pandemic hole, the effect of high inflation, rising interest rates and recession fears on consumer spending will hurt.

“As anticipated, year-on-year growth has moderated in 2H23 due to the business cycling an unimpeded 2H22 comparative period, including its busiest Easter period for several years, combined with a reduction in consumer spending associated with the current macroeconomic environment,” Ardent said in a trading update to investors.

The company said it saw “a meaningful increase” in attendances and per capita revenues so far in 2022-23, compared to the prior corresponding period.

The Group’s financial year-to-date revenues totalled $65.8m, almost double the $32.2m in the prior comparative period. In April it registered $8.1m in revenue, up 5.5 per cent on the sale month in 2022.

Ardent Leisure has reported “a meaningful increase” in attendances and per capita revenue.

It told investors that corporate costs have been consistent with first-half levels, however, growth had slowed.

“Despite emerging cost pressures, the business has continued to deliver a positive EBITDA (excluding specific items) for both the third quarter and April 2023 but at more subdued levels compared to the first half of the year,” the group said.

It told investors that the current economic headwinds were “episodic and not emblematic” for the leisure industry.

“Further, while international visitation to date remains low compared to historical levels, this is gradually recovering and presents upside potential for both Dreamworld/WhiteWater World and SkyPoint when these markets return to historical levels,” it said.

“Management remains highly focused on effective and disciplined management of all expenses, noting that there are certain safety and engineering priorities which cannot be compromised.

“The group also continues to focus on delivering its recently announced pipeline of new attractions to drive its recovery momentum and remains committed to unlocking further value for stakeholders.”

In the first six months of 2022-23 the group recorded a 136 per cent increase in revenue to $43.7m. Over the same period the business reported EBITDA of $4.3m.

As of May 2, 2023, the group held cash balances of $145.4m, while also heavily reinvesting in the business.

In February, Ardent reported that in the last six months of 2022 the total value of ticket sales to Dreamworld and WhiteWater World soared by 84.3 per cent – the highest in six years.

Despite a lack of international visitors, total visitation was up 67.4 per cent in the six months, compared with the previous corresponding period.

Ardent’s investment in Dreamworld included a new Wave Swinger ride, a redesigned and enhanced children’s areas a new Rivertown and a new “Jungle Rush” roller coaster that will feature the world’s first inclined turntable, as well as Dreamworld’s most immersive theming and storytelling ever built.

Ardent Leisure shares closed down 4c or 7.4 per cent at 50c.