Exhibition giant and Regal owner Cineworld Group has reported a narrowed 2021 pre-tax loss of $708 million after posting a 2020 loss of $3.0 billion due to the coronavirus pandemic, which had been its first-ever full-year loss.
The company also reported on Thursday that revenue for the year jumped 112 percent to $1.8 billion from $852.3 million in 2020, which compared with $4.37 billion in 2019. Key releases helping the performance included No Time to Die, the latest James Bond movie, and Spider-Man: No Way Home. Admissions for the U.K.-based company, the second-largest cinema chain in the world behind AMC Theatres, rose 75 percent to 95.3 million from 54.4 million.
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The group’s results for the year include a period of temporary closures from January to April/May due to COVID-19 restrictions and a “limited film slate,” Cineworld said, also noting “strong trading in the fourth quarter supported by a strong film slate and pent-up demand for affordable out-of-home entertainment.”
The cinema group, led by CEO Moshe “Mooky” Greidinger, also posted an adjusted loss before tax of $823 million, compared with a loss of $1.33 billion, and an adjusted loss after tax of $656 million, compared with a loss of $913 billion in 2020.
“Cineworld has delivered a resilient performance in a very challenging market, strengthening its liquidity position and continuing to demonstrate tight control over its operating costs and cash usage,” the firm said. “The group is in a good position to benefit from the expected industry recovery.”
Cineworld also provided an update on its high debt burden. As of the end of 2021, its net debt amounted to $4.84 billion, compared with $4.34 billion a year earlier. The company said it raised “over $424.9 million of liquidity and received $203 million under the United States CARES Act tax refund” last year. Cash and restricted cash stood at $354.3 million at the end of December, compared with $336.7 million a year earlier.
“Most” cost reductions instituted during the COVID pandemic, outside of temporary cinema closures, are “there to stay for us,” Greidinger also highlighted during a conference call. “We had to be very, very careful with cash. … We really had very strong cost reductions.” Management put the net annual cost savings at $50 million-$75 million.
However, Cineworld reiterated previous comments, which had first made headlines in 2020, that “material uncertainty” remains about is ability to continue as a going concern, meaning it could go out of business. The company added that it was “assessing several options with regard to additional sources of liquidity.”
Addressing a potential bill of C$1.23 billion ($972 million) in damages for abandoning the planned $2.10 billion attempted takeover of Canadian cinema giant Cineplex, management reiterated that it has appealed a Canadian court decision and “does not expect damages to be payable whilst any appeal is ongoing.” But the company’s earnings report also warned that, if Cineworld is unsuccessful on appeal, “sufficient liquidity does not exist to be able to pay the damages awarded.”
Looking ahead, Cineworld noted a “gradual recovery of admissions and demand since re-opening, supported by strong retail sales and premium formats,” with January and February “impacted by omicron and (a) lack of major movie releases, but we anticipate strong trading starting March 2022 supported by a strong and full film slate.”
“Our strong final quarter performance reflects the pent-up demand for affordable out-of-home entertainment and the record-breaking film slate, including Spider-Man: No Way Home, which showcased the importance of cinematic releases,” said Greidinger. “The business is well positioned to execute its strategy and capitalize on the highly anticipated movie schedule, which includes Avatar, Top Gun Maverick, Jurassic World: Dominion, Minions: The Rise of Gru, Doctor Strange in the Multiverse of Madness, Thor: Love and Thunder, Black Panther: Wakanda Forever, Bullet Train, Spider-Man: Across the Spider-Verse, Pixar’s Lightyear, Fantastic Beasts: The Secrets of Dumbledore, Elvis and many more.”
In November, the company had reported improving box office and concession revenue trends for its third quarter and October, which neared pre-pandemic levels as revenue for the month amounted to 90 percent of 2019 results, with December also coming in at 88 percent. For March 1-13, the company reported it was running at 86 percent of 2019 levels after February had come in at 64 percent of 2019 results and January at 54 percent due to omicron.
The company back then also highlighted that it had returned to generating positive cash flow, calling this “an important milestone in the company’s recovery.” However, the omicron variant of the coronavirus after that led to renewed cinema closures in various markets around the world.
Cineworld’s U.S. business posted a box office revenue jump of 124 percent to $627.4 million in 2021 as admissions rose 87 percent and the average ticket price rose 20 percent. “The increase in average ticket price was primarily a result of the
increased availability and uptake of premium format content during 2021 compared with 2020,” the firm said.
Cineworld’s stock was trading lower on Thursday. As of mid-day, it was down 1.4 percent.
