Ardent Leisure expects wild ride to continue all year

Ardent Leisure expects wild ride to continue all year

Dreamworld operator Ardent Leisure's (ASX: ALG) fortunes continue to wane amid ongoing COVID-19 disruptions and closures of its operations in Australia and the US.

The company was encouraged by the revenue performance from its Main Event bowling and entertainment centres in the US which exceeded expectations until they were hit by a second wave of the coronavirus in November last year.

That setback, and the closure of Dreamworld for most of the period, led to a widening of the company's losses to $83.6 million for the six months to the end of December, up from a loss of $22.5 million a year earlier.

The shutdowns saw group revenue almost halved to $137.6 million from $263 million.

Theme park revenue, which includes Dreamworld and WhiteWater World, fell $23 million as the parks were closed until 16 September 2020. Attendance fell to 315,200 visitors from 761,300 previously, down 58.6 per cent

Ardent says it has been encouraged by visitor numbers since reopening with attendances running at 70 per cent of the previous corresponding period. The theme park is relying strongly on the local drive market at present.

The Skypoint attraction at Q1 in Surfers Paradise has been seriously impacted by interstate border closures with attendances running at just 27 per cent of the previous corresponding period.

In the US, 38 out of 44 Main Event centres were opened for trading by 29 December 2020 due to local COVID-19 restrictions, with a further four centres reopening in January 2021.

US-dollar revenue from Main Event is 37.7 per cent lower and in Australian-dollar terms 41 per cent lower. This is despite the full-period contributions of two new centres that opened in FY20 and one new centre that opened in early 1H21.

In Australian dollar terms, Main Event revenue decreased by 41.0 per cent on a pro forma basis, reflecting the movement in foreign exchange rates.  

The setback hasn't slowed the company's growth plans, with four new centres scheduled to open in FY22.

Ardent Leisure chairman Gary Weiss laments the "unpredictability" of the pandemic on the company's businesses.

"The group started FY21 in a strengthened financial position due to the Queensland Government financial assistance package and RedBird Capital partnership with Main Event," he says.

Ardent sold a 24.2 per cent stake in Main Event to private equity firm Redbird Capital Partners for $US80 million ($A100 million).

"Despite the challenges during the first half of FY21, the board and management have maintained a disciplined approach to capital and expense management resulting in the group being in a strong cash position at the end of the first half," says Weiss.

"While we anticipate the uncertainty of the pandemic to continue for the remainder of this calendar year, we look forward to welcoming back all our team members and guests to our venues."

Theme parks CEO John Osborne is confident the Australian vaccination program will lead to a turnaround in the company's domestic businesses.

"However, we believe that uncertainty is likely to prevail for at least the next 12 months," he says.

"The work that we have done over the last year has made us match fit and ready to accept the challenges of the everchanging landscape."

Ardent is planning a new $32 million rollercoaser ride, Steel Taipan, as part of its renewal plan for Dreamworld. It is expected to be completed in the fourth quarter of this calendar year ahead of the peak holiday period.

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