Intrawest cuts profit forecast for 2006 

Whistler Blackcomb poor returns cited

A drop in visitors to Whistler and Blackcomb Mountains lies behind Intrawest’s decision to cut its profit forecast for this year.

In a recent announcement Intrawest said its earnings forecast would be down $14 million (all figures in U.S. dollars). Over half of that is attributable to the drop in mainly U.S. visitors to Whistler-Blackcomb, which represents more than 40 per cent of the company’s resort revenues.

"Mixed conditions at Whistler Blackcomb, with the earliest season opening in 12 years followed by challenging weather in December, led to a 3% decline in skier visits in the 2005 quarter," states the second quarter fiscal report released last week.

The forecast is also being impacted by the poor ski season last year when it rained to the top of the Mountains in February.

Intrawest spent close to a $1 million to keep operations going and many in the resort credited the Mountains with helping keep business alive.

"We are seeing some spill-over effect at all our operations in British Columbia (Whistler Blackcomb, Panorama and Alpine Helicopters) from the sub-standard ski season last year," stated the quarter report.

And the strong Canadian dollar has played a role, too, states the report: "Furthermore all our Canadian businesses (particularly Whistler Blackcomb) are experiencing a decline in destination visits due to the high Canadian dollar."

The rest of the reduction in forecast earnings came from Heli-skiing activities in B.C., which will cost Intrawest about US$2.5 million in reduced earnings and $4 million will be lost because of a December strike at Intrawest’s Mont Tremblant resort in Quebec.

Intrawest’s resort and travel operations earning for 2006 (before interest, taxes, depreciation and amortization - EBITDA) are now expected to range from $96 million to $106 million. Previously it was expected to be between $110 million to $120 million.

Other second quarter highlights are:

• The sale of majority interest in Mammoth Mountain Ski Area which resulted in an after-tax gain of $60 million. Intrawest retains 15% interest in the resort.

•Abercrombie and Kent reported a 42 per cent increase in adventure-travel EBITDA.

• A strike at Mont Tremblant and reduced destination visitors in the early winter season at resort operations in B.C. led to a reduction in resort and travel operations EBITDA.

• December 2005 was a record month for real estate launches achieving pre-sale revenues of $534 million.

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