Disney Cuts Profit by $1.4 Billion Withdraws Dividend Payment due to Pandemic

Entertainment Company Walt Disney Co. (DIS) has provided measures it will be taking so as to enable the company overcome the pandemic while maintaining losses at minimum levels possible.

Disney has announced it will be reducing profit by $1.4 billion, the company said a large chunk of this loss will be coming from its theme parks business which have been performing terribly bad since coronavirus pandemic set foot.

In addition, Disney won’t be paying any dividend in the first fiscal half of the year, this will save the company up to $1.6 billion in cash with an assumption that it would have maintained the dividend constant at 88 cents per share.

“In total, we estimate that the COVID-19 impacts on our current quarter income from continuing operations before income taxes across all of our businesses was as much as $1.4 billion. $1 billion of that came from losses at theme parks,” said Disney.

Disney parks have been recording lowest numbers of visitors due to lockdowns and stay at home orders placed upon many countries hence the low numbers. Nonetheless, Disney announced starting from next week it will be reopening Shanghai Disneyland once again regardless of the number of visitors.

The company added that it’s not certain if its other parks across Asia, France and the U.S will be resuming operations next week or if they will reopen when other businesses of Disney like retail stores and cruise ships will be resuming operations.

While it’s too early to predict when we’ll be able to begin resuming all of our operations, we are evaluating a number of different scenarios to ensure a cautious, sensible and deliberate approach to the eventual reopening of our parks,” said CEO Chapek.

Newly appointed Chief Executive Officer, Bob Chapek, explained how the coronavirus pandemic had deeply affected the company’s operations worldwide further breaking the announcement of resuming operations in Shanghai park on May 11.

Chapek said Chinese authorities had directed them to minimize number of visitors in Shanghai Park to 30% which roughly translates to 24,000 people. The CEO said they will be allowing even a much less number that what the authorities have recommended on top they will be enforcing other measures like temperature screening and social distancing to help curb spread of the deadly virus.

Disney has been taking all possibly necessary measures to survive this hard pandemic time, the company has been trimming costs consistently and according to a filing with securities regulators, Disney  is putting 120,000 employees on furlough. Additionally, the company has also slashed salaries of employees all through including top executives who believe the company will overcome the pandemic.

I have absolute confidence in our ability to get through this challenging period and recover successfully,” said Bob Iger, latest former CEO and Executive Chairman of Disney.

 

 

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