Shares in theme park operator Village Roadshow (ASX: VRL) have hit their lowest level in six years as it reported weak visitor numbers because of competition from the Gold Coast Commonwealth Games.
The company released a trading update for the nine months to March 31 and also blamed wet weather in March for the drop in visitors as it downgraded its earnings forecasts for the full year.
Village Roadshow says its two main divisions, Theme Parks and Cinema Exhibition, have continued to experience "challenging trading conditions" and it now expects full year net profit after tax (NPAT) to be below its February forecasts of between $12 million and $17 million.
It now expects its FY18 NPAT to be within the range of a $10 million loss to break even.
Despite attendances being hit by the Commonwealth Games, the Gold Coast-based Village Roadshow says it expects to benefit from the event in the long term.
"The outstanding success of the Commonwealth Games for the Gold Coast should see the Parks benefit in the longer term from the highly visible media coverage generating tourism growth in the region," the company says in an ASX statement.
Village Roadshow Theme Parks is a wholly-owned division of Village Roadshow and is headquartered on the Gold Coast where it operates Movie World, Sea World, Wet'n'Wild, Paradise Country, Australian Outback Spectacular and Sea World Resort & Water Park, which includes a 402 room hotel. It also has Wet'n'Wild Sydney and has majority ownership of Wet'n'Wild Las Vegas.
Village Roadshow's Gold Coast parks are yet to recover from the impact of the fatal accident at Ardent Leisure's Dreamworld in 2016 and the company also revealed its Cinema Exhibition division experienced a "slow start" to FY18 along with a "softer than expected" March 2018 result and this had also caused the earnings downgrade.
However, Village Roadshow is pinning hopes of a recovery on major releases such as Avengers: Infinity War, Solo: A Star Wars Story, Deadpool 2 and Jurassic World: Fallen Kingdom which are all scheduled for release in the last quarter of the financial year.
At around 11.30am, VRL shares were down by more than 10 per cent to $2.82, its lowest level in six years.
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