Disney beats estimates as parks and cruise business hits record sales

Walt Disney Co. reported sales and profits that beat estimates in its fiscal first quarter; Record revenue of $10 billion from the division that includes parks and cruises also contributed to this.

Earnings per share in the period were $1.63, above the average analyst estimate of $1.56.

The bulk of the company’s profit in the quarter was driven by its parks and rides unit, led by Josh D’Amaro, the candidate to replace Bob Iger as CEO when Iger leaves the position this year.

Disney’s board is gearing up to promote D’Amaro to CEO and will vote on a new leader next week, Bloomberg reported Sunday. The Burbank, California-based entertainment giant said it will name his successor before the end of March.

Shares rose 4.2% in premarket trading Monday

The company said Monday that profits at its parks unit rose 6% from a year earlier to $3.3 billion, driven by increased attendance, guest spending and the addition of a new cruise ship.

Profits at the entertainment division, led by Dana Walden and Alan Bergman, fell by more than a third to $1.1 billion. This was set back by a decline in political advertising on Disney’s television channels and streaming services and marketing costs associated with the release of James Cameron’s Avatar: Fire and Ash. Disney said in November that its entertainment unit would cover these one-time expenses.

Profits at the Jimmy Pitaro-led sports division fell 23% to $191 million, driven by increased rights fees for new NBA and college sports packages. Subscriber fees in the division that includes ESPN also dropped.

The company’s sales increased 5% overall to $25.98 billion.

For the current quarter, Disney expects its entertainment division’s operating income to remain flat compared to the same period last year. The company expects profits of $500 million in its TV broadcast business, an increase of $200 million compared to the same period last year.

Disney said operating income at its parks unit should show “modest” growth because of the costs associated with a new ship and difficulties attracting international visitors. The sports division’s profits will be $100 million lower due to higher rights fees.

For the full year, Disney is forecasting double-digit earnings per share growth. The company also said it is on track to buy back $7 billion worth of shares this year.