Cineworld Results: Exhibition Giant Suffers Massive Half-Year Downturn Due To COVID

Andreas Wiseman
·4 min read

Leading exhibition chain Cineworld, which owns Regal in the U.S., has presented inevitably bleak interim results for the six month period ended 30 June 2020.

Group revenue fell to $712.4M from 2019’s $2.1BN and group adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) fell to $53M from 2019’s $758.6M. Admissions fell from 136M to 47.5M.

The group registered a pre-tax loss of $1.6BN, compared to a $139.7M profit in 2019. Basic earnings per share were -115.3 cents, down from 8.6 cents last year, and net debt came in at $8.2BN at the end of the period, up by $512M since 31 December 2019. This morning’s report saw shares in the company sink by 15% at the open.

Cineworld acknowledged the “severe impact” of cinema closures.

All sites across the group were closed between mid-March and late June-August due to the pandemic. Currently, 561 out of 778 sites are re-opened, with 200 theaters in the U.S. (mostly in CA and NY), six in the UK and 11 in Israel still closed.

The group raised $360.8M in additional liquidity during the period and said that negotiations with the banks are ongoing in order to obtain covenant waivers in respect of December 2020 and June 2021. It also noted the termination of the of Cineplex transaction.

The firm said there were some positives on the horizon in the shape of “steady performance of re-opened sites in ROW territories and initial admission build-up in the UK and US driven by the release of Tenet and local movies.”

However, with many tentpoles being delayed and countries tightening restrictions in the face of second waves of coronavirus, the company warned of further challenges ahead: “There can be no certainty as to the future impact of COVID-19 on the Group. If Governments were to strengthen restrictions on social gathering, which may therefore oblige us to close our estate again or further push back movie releases, it would have a negative impact on our financial performance and likely require the need to raise additional liquidity. We have highlighted the potential impact this could have on the Group within our going concern statement in this document.”

Mooky Greidinger, Chief Executive Officer of Cineworld Group, commented: “Despite the difficult events of the last few months, we have been delighted by the return of global audiences to our cinemas toward the end of the first half, as well as by the positive customer feedback we have received from those that have waited patiently to see a movie on the big screen again.

“The impact of COVID-19 on our business and the wider leisure industry has been substantial, with the closures of all of our cinemas worldwide for an extended period. During this unprecedented time, our priority has been the safety and health of our customers and employees, while at the same time preserving cash and protecting our balance sheet. Our mitigating actions included reducing and deferring costs where possible; making use of government support schemes for our employees; partially delaying capital investments; and suspending our dividend. We have also raised an additional $360.8m of liquidity to support our business.

“Current trading has been encouraging considering the circumstances, further underpinning our belief that there remains a significant difference between watching a movie in a cinema – with high quality screens and best-in-class sounds – to watching it at home. As part of this, our policy regarding the theatrical window remains unchanged as an important part of our business model, and we will continue to only show movies that respect it. While there continues to be a lot of uncertainty, we have a dedicated and experienced team that is focused on managing business continuity while taking advantage of the strong slate currently planned for the months ahead.”

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