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Why Village Roadshow Ltd shares plunged 11% lower

One of the worst performers on the market today was the Village Roadshow Ltd (ASX: VRL) share price.

The entertain company’s shares finished the day almost 11% lower at $3.67 following the release of a disappointing trading update.

According to the update, management expects its financial results to be substantially below the prior comparable period due to the challenging trading conditions being faced by its Theme Parks and Cinema Exhibition divisions.

Management has placed the blame on a weak series of film releases and the lasting impact from the tragedy at the Ardent Leisure Group (ASX: AAD) operated Dreamworld theme park in 2016.

The company’s cinema business is expected to recover somewhat in the second-half and its theme park businesses have seen improved ticket revenues in the month of January.

In light of this, management expects things to improve in the second-half and has provided full-year net profit after tax and before material items and discontinued operations guidance of $12 million and $17 million.

In FY 2017 Village Roadshow posted full-year net profit after tax and before material items and discontinued operations of $23.6 million. This itself was a decline from $50.9 million in FY 2016.

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Motley Fool contributor Motley Fool Staff has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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