Disney beats estimates as parks and cruise business hits record sales

Walt Disney Co. reported sales and profit that beat estimates in the first quarter of its fiscal year, boosted by a record $10 billion in revenue from the division that includes parks and cruises.

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

The bulk of the company’s profits in the quarter were delivered by the parks and cruises unit led by Josh D’Amaro, a candidate to succeed Bob Iger as chief executive officer when Iger steps down this year.

Disney’s board is aligning on promoting D’Amaro to CEO and will vote on naming a new leader in the coming week, Bloomberg reported on Sunday. The Burbank, California-based entertainment giant has said that it will name a successor before the end of March.

The shares jumped 4.2% in premarket trading on Monday

Profit at the parks unit rose 6% from a year earlier to $3.3 billion, driven by higher attendance, guest spending and the addition of a new cruise ship, the company said in a statement Monday.

In the entertainment division, led by Dana Walden and Alan Bergman, profit fell by more than a third to $1.1 billion. It was held back by a decline in political advertising on Disney’s television channels and streaming services, as well as by marketing costs tied to the release of James Cameron’s Avatar: Fire and Ash. Disney had flagged in November that the entertainment unit would incur those one-time expenses.

Profit at the sports division, led by Jimmy Pitaro, fell 23% to $191 million, weighed down by higher rights fees for new NBA and college sports packages. Subscriber fees at the division that includes ESPN also fell.

Sales for the company overall rose 5% to $25.98 billion.

For the current quarter, Disney forecast that operating income would be flat compared with the same period last year in the entertainment division. The company expects a profit of $500 million in its streaming TV business, however, an increase of $200 million from the same period last year.

Operating income at the parks unit should show “modest” growth, due to costs associated with a new ship and challenges attracting international visitors, Disney said. Profits will be $100 million lower at the sports division due to higher rights fees.

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