Fewer people coming out to its multiplexes to see Hollywood movies led Cineplex on Wednesday to post sharply lower second-quarter earnings.
The Canadian exhibition giant posted a profit of CAN$1.4 million (US$1.12 million), down sharply from year-earlier earnings of $7.2 million, as attendance fell 2.2 percent to 16.5 million patrons. Stock in Cineplex slid CAN$4.33 (US$3.45), or nearly 9 percent, to CAN$45.20 (US$36.00) in afternoon trading on the Toronto Stock Exchange.
That came a day after AMC Theatres previewed its own financial quarter amid a box-office slump, sending its shares down 27 percent in afterhours trading. Cineplex CEO Ellis Jacob told The Hollywood Reporter that unveiling his own company's financial results, which he called "mixed," after AMC and Cinemark and other U.S. peers saw their shares sink didn't help the Canadian investor reaction.
Revenue at Cineplex rose 7.7 percent to CAN$364.1 million (US$290 million) during the latest quarter, as overall box-office revenue climbed 2.4 percent to CAN$170.7 million (US$135.4 million) after the exhibitor had Guardians of the Galaxy Vol. 2, Wonder Woman and The Fate of the Furious on its screens.
"We were up and the U.S. was down," Jacob said of his company's Hollywood box office during the second quarter, compared to south of the border. At the same time, Cineplex faced a host of one-time costs as it continues to diversify into entertainment, gaming and other new businesses to reduce the impact of the vagaries of Hollywood movie exhibition.
Cineplex saw amusement revenue nearly double to CAN$45.7 million (US$36.4 million) during the latest quarter after acquiring Tricorp Amusements, SAW and Dandy Amusements International in the last year. The exhibitor last month opened in Toronto its second The Rec Room gaming and live entertainment venue, with plans to open three more, and signed a deal to bring the U.S.-based Topgolf entertainment venue to Canada.
"This is a not a diversification strategy that started this quarter because the box office wasn't good. We've been doing this for the last seven to 10 years," Jacob argued.