Disney reports a 37% drop in operating income in the second quarter

Disney (NYSE: DIS) released its quarterly financial results on Tuesday that topped analysts’ estimate for revenue but fell short on the earnings front. Following the release of the financial report, Disney was reported over 2% down in extended trading on Tuesday.

The company said that the Coronavirus pandemic weighed on its cruise and theme parks businesses. However, demand for its newly launched Disney+ was reported higher as the outbreak restricts people to their homes. The new streaming service had 54.5 million paid subscribers as of May 4^th.

Disney’s Q2 financial results versus analysts’ estimates

According to Refinitiv, analysts had expected the company to print £14.37 billion in revenue in the second quarter. In terms of earnings per share (EPS), their estimate was capped at 72 pence per share. In its report on Tuesday, the company boasted a higher revenue of £14.54 billion in Q2 but its earnings were shy of the estimate at 48 pence per share.

CFO Christine McCarthy also commented on the performance results and highlighted that Disney will no longer be paying its dividend in the first half of the current fiscal year. The move, as per the company, will expand its cash reserves by £1.29 billion at a constant dividend of 71 pence per share.

At £1.95 billion, Disney’s net operating income in Q2 was 37% lower than £3.08 billion in the same quarter last year. The second quarter was the first of Disney under the new CEO Bob Chapek.

Disney said that it saw the most pronounced impact of COVID-19 on Parks, Experiences, and Products business. The segment took a roughly £800 million hit to its operating income, as per Disney’s estimate. The operating income from the aforementioned business in the recent quarter was noted 58% lower than the year-ago figure.

Other noticeable figures in Disney’s report

Other noticeable figures in Disney’s report on Tuesday include £5.86 billion in revenue from media networks that marked a 28% year over year growth. On an annualized basis, the company saw an 18% growth in revenue in the studio entertainment segment, and over 100% revenue growth in direct-to-consumer and international business.

Revenue from parks, experiences, and products declined by 10% to £4.47 billion in the second quarter. The company furloughed around 100K workers in this segment last month.

Disney is currently around 35% down year to date in the stock market. The £147.31 billion company has a price to earnings ratio of 16.15.