Imax China Profits Fall 13 Percent in 2016

Allison Michael Orenstein
Richard Gelfond

The company attributed the decline to a slowdown in growth at the Chinese box office and spending on new theater installations.

Hit by a slump at the Chinese box office, Imax China reported Friday that adjusted profit for 2016 fell 13 percent from the year prior, totaling $37.6 million.

The giant-screen exhibitor, which is a subsidiary of Toronto-based IMAX Corp. but is listed separately on the Hong Kong stock exchange, said the profit slide also reflected increased investments in revenue-sharing theaters, which carry upfront marketing and launch costs.

After nearly a decade of averaging 30 percent year-on-year growth, China's box office stalled in 2016, growing just 3.7 percent.

Imax China reported revenue of $118.5 million in 2016 and gross profit of $69.3 million. As of year end, Imax had 424 theater systems installed in Greater China, of which 407 were in commercial multiplexes. Some 261 of these theaters operate under revenue-sharing arrangements and 163 are operating under sales and sales-type lease arrangements, the company said.

The company also had 334 theaters in backlog at the end of last year, of which 275 are for revenue-sharing arrangements. 

"In 2016 alone, we expanded the network by more than 40 percent and saw record-level signings activity, most of which came from existing partners looking to further expand their existing IMAX footprint," said Richard L. Gelfond, chairman of IMAX China. "This is particularly encouraging as these metrics not only serve as a key barometer for future growth, they also come ahead of what has already been a strong start to the robust 2017 film slate, with hit titles such as Journey to the West: The Demons Strike Back and xXx: Return of Xander Cage," he added.