Village Roadshow shares lift on cost savings, payout

Village Roadshow says its full-year performance defied a downturn in consumer spending.

Sea World dolphin trainer Richelle Reading, with Kiama. Picture: Tim Marsden

Village Roadshow says its full-year performance defied a downturn in consumer spending, as the entertainment giant and theme park operator touted its cost savings program and reinstated its final dividend payout on Thursday.

Unveiling its full-year results, the company (VRL) said the new financial year had started strongly, with record July attendances driving higher theme park spending.

That was due to what the company called a “worldwide phenomenon” of people increasingly seeking experiences, rather than things.

“People are less inclined to go to retail stores and buy handbags and new refrigerators but they are very inclined to spend money on experiences and entertainment, but they have to be high quality,” chief executive Graham Burke told The Australian.

“It’s all about offering people a great experience and we believe we’re doing that with smart investment and new attractions.”

A scene from The Lion King.

The company’s theme park business, which includes Warner Bros Movie World, Sea World and Wet’n’Wild, had been hit by the fatal tragedy at neighbouring rival theme park Dreamworld in October 2016, which shook the confidence of theme park goers.

But Mr Burke said the resulting downturn in theme park attendance had now passed.

$2.82 Village Roadshow closed up 40¢ p

Shares in Village shot up 15.7 per cent to $2.80 each on Thursday after the company posted a lift in annual profit and declared a final dividend of 5c per share fully franked, after last paying a dividend to shareholders in October of 2016.

For the full year to June 30, net profit after tax and excluding ­material items came in at $20.6 million, compared to a $7.3m loss the previous year, down 8 per cent on consensus estimates.

Citi analyst Sam Teeger said the profit result missed Citi’s numbers by 4 per cent, primarily due to weaker than expected results in the company’s cinema and movie distribution businesses.

“While the fiscal year result was weaker than expected, we see the stock trading up given how weak the share price has been over the last 2 months; reasonable outlooks for the core divisions; increased focus on the core businesses with more non-core asset sales, and capex being spent on core cinema exhibition business,” Mr Teeger said.

Village told investors on Thursday that it would revamp its cinemas to make going to the movies fashionable again, including installing better seats and decor, after earnings before interest, tax, depreciation and amortisation in the cinema business slumped to $54m for the full year, compared to $58m the prior year.

The company said that its cost reduction program, implemented during the 2019 fiscal year, would deliver annualised savings in excess of $10m across the group.

Mr Burke, who started work for Roc Kirby, Village Roadshow’s founder, at the age of 14 as a ticket collector and floor sweeper, announced in February that he would retire at the end of the calendar year. He will remain on the company’s board as a non-executive director.