UK-based Cineworld Group is anticipating cinema admissions will not bounce back to pre-pandemic levels in 2023 or 2024, based on its interim results for the sixth-month period ending on June 30, 2022.
The financially troubled group, which filed for Chapter 11 bankruptcy earlier this month, owns Regal Cinemas in the US, Cineworld and Picturehouse cinema chains in the UK and Ireland, Cinema City in Central and Eastern Europe and Yes Planet and Rav-Chen in Israel.
A statement said that “the Covid-19 pandemic has materially impacted all aspects of the group’s operation since the first quarter of 2020. While monthly admission levels progressively recovered in the first half of 2022, they remained below both pre-pandemic levels and the group’s original forecast for 2022. This led to a general tightening of the group’s overall liquidity position.”
Revenue has grown to $1.51bn in the first six months of 2022, compared to $292.8m for the same period of 2021. Gross profit stood at $424.5m compared to $9.6m for the same period in 2021, and operating profit stood at $57.3m compared to an operating loss of $208.9m in 2021 in the same period. Loss before tax reduced to $364.9m from $576.4m.
Cineworld’s net debt as of June 30 2022 stood at $8.808bn, compared with $8.877bn as of Dec. 31, 2021. The company had $131m in cash as of the end of June, compared with $354m at the end of 2021.
The group admitted that it had “reviewed and revised down its short and medium-term cinema admission forecasts. The review was prompted by the slower-than-expected recovery being experienced in 2022 combined with external forecasts indicating a lower volume of theatrical releases in 2023 and 2024.”
The statement continued: “Q3 [third quarter 2022] admissions have been below expectations. Q4 is anticipated to be stronger, supported by the scheduled release of Black Adam, Black Panther: Wakanda Forever, Avatar: The Way Of Water and other blockbuster films. Cinema admissions in both FY23 [fiscal year 2023] and FY24 [fiscal year 2024] are expected to remain below pre-pandemic levels.”
The group is also facing a sizable fine following its abandoned takeover of Canada’s Cineplex in mid-2020. It received approval from a US bankruptcy court for ‘first day’ relief following the exhibitor’s Chapter 11 filing.
The move will see the group granted access to “up to approximately $785m of an approximate $1.94bn debtor-in-possession financing facility”. This means that the group has sufficient liquidity to meet ongoing obligations, including employee wages, salaries and benefits as well as post-petition obligations to vendors and suppliers. “During the restructuring process, the group expects to operate its global business and cinemas as usual without interruption,” said the statement.
Cineworld and its subsidiaries operate cinemas in 10 countries with 747 sites.
Mooky Greidinger, CEO of Cineworld Group, said: “The first half of 2022 was clearly impacted by the enduring effects of Covid-19. Despite these challenges, the continued gradual improvement in our trading performance was encouraging. In particular, we were encouraged by the strong successes of Top Gun: Maverick, Doctor Strange In The Multiverse Of Madness, The Batman and Jurassic World Dominion.
“In Q3 2022, admission levels have been below expectations. These lower levels of admissions are primarily due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading.
“Our strategy continues to be driven by our desire to create the best cinema experiences for our guests, providing them with big screens and stadium seating, accompanied by the great technology of our premium formats, as well as upgrading to the use of laser projectors.
”We strongly believe that our customers have missed the big screen experience and the social event of watching a movie with others. The upcoming winter film slate, including but certainly not limited to Black Panther: Wakanda Forever and Avatar: The Way Of Water, gives us confidence that trading will improve from its current levels. This will be assisted by our clear focus on growth and the dedication of our team.
“Looking ahead, we continue to be cautious about the short and medium-term outlook due to economic uncertainty in a number of our key markets and the impact of significant inflationary pressures on guests. “
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