Inside Out 2 boosts Disney as theme parks struggle

The runaway success of Disney's Inside Out 2 has helped boost the entertainment giant's profits, but there are troubles elsewhere in the Magic Kingdom.

In the three months to June, Disney swung to a pre-tax profit as revenue rose, thanks in large part to the Pixar sequel becoming the highest-grossing animated film of all time.

Disney also said its streaming business was profitable for the first time.

However, analysts said the results were disappointing overall as its theme parks brought in less money than expected.

The Olympics in Paris, where Disneyland is based, were partly blamed for the drop in its theme park takings, which make up over half its profit. A drop in consumer spending was also blamed.

Meanwhile, Disney said it expected lower demand in its US parks to continue in to the second half of the year.

Media analyst Ben Barringer at Quilter Cheviot said the limp results add "fuel to the fire" of fears around the American economic slowdown, which left global stock markets jittery over the weekend.

Disney has also been under pressure as audiences move away from traditional TV viewing habits and cinema.

At its last financial release in May, it was banking on a crackdown on password sharing to help boost its streaming subscriber numbers.

Chief executive Bob Iger was brought out of retirement to help turn the company around, but there is much more work to be done, said Mr Barringer.

"We should expect further struggles through the rest of the year", he said, as the company was still very much in "turnaround mode".

He said some of its problems were down to "Disneyland Paris struggling due to the Olympics being in town, as well as China going through its own economic problems".

However, he said that further "stellar returns" could be expected from Deadpool & Wolverine's release.

The Marvel crossover film had an impressive opening weekend in the US – and became the eighth-biggest opening ever and best of the year so far.

"After several years of misfires and muted successes, Disney has now in the span of a month and a half released the highest grossing animated film of all time and achieved the largest ever opening for an R-Rated film," Moffett Nathanson media analyst Robert Fishman wrote ahead of Disney's earnings release.

However, he added that "it remains to be seen whether those successes represent a return to form" as it relies on "highly dependable titles" including Moana 2, Mufasa: The Lion King to bring in audiences over the coming months.

Although its streaming business did well in the US and Canada, its business in India saw a 6% decline from the previous year.