Dubai: DXB Entertainments on Sunday reported adjusted EBITDA [Earnings before interest, tax, depreciation and amortization] profit of Dh2 million for the fourth quarter of 2019, marking the first quarter of reported profitability.
The result marks the company achieving of breakeven for a quarter ahead of its previously announced target of second half of 2020.
“I am pleased to report strong performance during the final quarter of the year, with the implementation of our efficiency program helping us deliver an adjusted EBITDA profit of Dh2 million for three months ended 31 December 2019. This marks the first quarter of profitability in the history of our company and is an encouraging result as we progress with the implementation of our strategy, focused on driving business growth and operational efficiency,” said Mohamed Almulla, CEO and Managing Director, DXB Entertainments.
Investors who have held the stock for three years witnessed it decline a whopping 86 per cent. And the ride hasn’t got any smoother over the last year, with the price 24 per cent lower in that time. More recently, the share price dropped a further 11 per cent in a month.
So the current set of results were welcomed by investors, after the company recorded a near 10 per cent rise in quarterly revenue on higher occupancy at its hotels and losses declined as the company cut back costs. As the firm continued to face declines in annual revenue, an analyst who does not actively cover the stock said the company achieving EBITDA break-even in 2020 still looks challenging.
“We believe the company doesn’t have much room for further cost cutting, thus making it unlikely for the company to break-even in 2020,” the analyst said, but added that the results were cheered on Sunday in light of the management saying that further savings were expected this year as it reined in more costs.
- By Justin George Varghese, Staff Reporter
The company reported 2019 revenue of Dh491 million, down 9 per cent year on year due to visitation decreasing by 7 per cent to 2.6 million. Operating costs improved by 24 per cent to Dh556 million year-on-year with further savings expected in the current year.
“Our business does however remain cyclical and whilst we expect profitability in Q1 and Q4 2020, which are our busiest quarters, Q2 and Q3 2020 will remain loss making our efficiency program is delivering good results, with year-on-year savings in operating costs of Dh172 million in 2019, with further savings due to be realised in 2020. Our focus is now on delivering EBITDA profitability on a full year basis by achieving revenue growth, specifically through initiatives to drive visitation from our core international markets and through our hotel strategy," said AlMulla .
Although the Group reported total revenue of Dh491 million, a decrease of 9 per cent on the prior year, excluding Dh33.6 million of one-time revenue associated with a tenant settlement, total revenue decreased by 15 per cent.
Last year’s adjusted EBITDA loss was Dh149 million, an improvement of Dh90 million or 38 per cent year-on-year. Statutory EBITDA loss was Dh106 million in 2019 compared to Dh210 million in the prior year.
Net loss for the year ended 31 December 2019 was Dh855 million, inclusive of non-cash deprecation of Dh384 million, non-cash finance charges of Dh 107 million and cash finance charges of Dh278 million.
Of the total Group revenue of Dh491 million, Dh310 million was generated through the theme parks, Dh84 million through hospitality, Dh51 million through retail and Dh46 million through other revenue streams, including sponsorship.
Theme park revenues of Dh91 million in Q4 2019 decreased by Dh11 million or 11 per cent compared to Q4 2018 due to lower visits and per capita spend. Within the theme parks, 66 per cent of revenue in Q4 2019 was driven through admissions and the remaining 34 per cent through in-park spend.
The company reported that Lapita Hotel revenue decreased by 13 per cent to Dh25 million in Q4 2019, compared to Dh29 million in Q4 2018. Average occupancy increased to 68 per cent whilst the average daily rate at Dh597 in Q4 2019 was 24 per cent lower than the fourth quarter of 2018, in line with the general trend across the market.
