Exhibitor Cinemark Reports Lower Fourth-Quarter Earnings
UPDATED: The bottom line was hit by the firm's stake in RealD as revenue increased 2.1 percent amid lower admissions revenue due to a weaker U.S. box office, offset by a 7.9 percent concession revenue gain.
NEW YORK - Movie theater operator Cinemark Holdings on Wednesday reported lower fourth-quarter earnings that were cut in half amid mixed revenue trends affected by the lower U.S. box office.
The exhibition company posted a quarterly profit of $18.3 million, down from $38.0 million in the year-ago period. An after-tax loss on marketable securities of $7.9 million in the latest period was a drag on the results. It was related to the company's stake in 3D technology firm RealD.
Overall revenue increased 2.1 percent to $535.9 million as admissions revenue fell 1.4 percent to $336.9 million driven by a weaker U.S. box office, but concession revenue jumped 7.9 percent to $166.0 million. As challenges in the fourth quarter, Cinemark management cited tough year-ago box office comparisons, fewer 3D films in the latest period than in the year-ago quarter and the overlap of films with similar target audiences late in 2011.
Attendance in the U.S. dropped 2.6 percent, but rose 12.1 percent internationally. Average ticket prices declined 2.1 percent here and 3.2 percent internationally for a 3.7 percent drop overall.
“Cinemark’s increase in attendance this quarter of 2.3 percent drove an admissions revenue performance that again exceeded the North American industry’s box office results," highlighted new CEO Tim Warner. "Our Latin American assets led us with admissions revenue growth of 8.4 percent.”
Management on a conference call said the 2012 box office is off to a strong start and cited the much-anticipated upcoming Hunger Games as a likely strong contributor.
Asked about the outlook for 3D, Warner highlighted that such great filmmakers as Steven Spielberg and Martin Scorsese have now used the format. "The creative community in general is getting a lot more comfortable with the 3D format," he said, also citing the 3D re-releases of classic films as a promising opportunity.
Asked about the Open Road Films label run by rival exhibitors AMC Entertainment and Regal, management said it was great for industry and Cinemark as it makes new product available. "Great product is good," Warner said, highlighting that access to Open Road movies is "very similar" to releases from any studio, meaning there is no access problem for exhibition competitors.