- Disney cautioned investors on its fourth-quarter earnings call that the Hong Kong protests could cost the company $US275 million in operating profit next year.
- The media conglomerate is projecting operating income will fall $US80 million at Hong Kong Disneyland during the first quarter of 2020 alone.
- The warning comes as widespread protests over the last several months have thrust Hong Kong into its first recession in a decade.
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If months of protests in Hong Kong spill over into 2020, Disney says it could absorb a $US275 million hit to its operating income.
The media conglomerate said operating profit fell $US55 million at Hong Kong Disneyland in the fourth quarter amid mass pro-democracy protests. The losses offset growth at Disneyland Paris and the Shanghai Disney Resort, CFO Christine Mary McCarthy said on Disney’s most recent earnings call.
“Circumstances in Hong Kong have led to a significant decrease of tourism from China and other parts of Asia,” McCarthy added.
The company also said in its earnings release that “lower results at Hong Kong Disneyland Resort were due to decreases in attendance and occupied room nights reflecting the impact of recent events.”
If the trends persist, the company expects to lose $US80 million in the first quarter of next year at Hong Kong Disneyland. The full-year losses could total $US275 million in 2020, McCarthy said.
Overall, Disney’s Parks, Experiences, and Products segment posted $US1.4 billion in operating income for the fourth quarter, a 17% increase from the same period last year.
The profit warning come as months of protests have pushed Hong Kong’s economy into its first recession in more than a decade. The city reported a 3.2% contraction in gross domestic product during the third quarter.
Shares of Disney are up 26% year-to-date.