Regal Owner Cineworld Posts Lower First-Half Results, Touts "Compelling Film Slate"

Regal Cinemas Generic - Getty - H 2019
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The British exhibition giant, which last year completed its $3.6 billion Regal acquisition, cites "the timing of major film releases in 2019 compared to 2018" for its slower start to the year.

British exhibition giant Cineworld Group, which last year completed its $3.6 billion acquisition of Regal Entertainment Group, on Thursday reported lower financials for the first half of 2019, citing difficult comparisons with a strong year-ago box office.

The company in May had said that the year got off to a slow start despite the record-breaking performance of Avengers: Endgame given such year-ago blockbusters as Black Panther, Avengers: Infinity War and Jurassic World, with its revenue down 9.4 percent for the first four months.

On Thursday, it said that at the mid-year point its revenue was down 11.1 percent on a pro forma basis, which assumes that it owned Regal for the complete year-ago period, to $2.15 billion. (Revenue increased by 15.5 percent when compared, without adjustments, with the prior-year period, in which Regal was only included for four months.) Cineworld again said that the drop was "due to the timing of major film releases in 2019 compared to 2018."

The company reported that its U.S. revenue fell 13.8 percent for the first six months of 2019 on a pro forma basis (including an 18.5 percent admissions drop and 17.9 percent box office and 9.9 percent concessions revenue declines). Its U.K./Ireland unit recorded a 5.2 percent drop assuming constant currencies, while its rest-of-world segment grew revenue 3.4 percent. 

Admissions for the first six months of 2019 fell 14.4 percent to 136 million, with box office revenue down 14.9 percent to $1.27 billion. But the company touted a "compelling film slate scheduled for the second half following the recent strong performance of The Lion King in July."

Concession revenue for the six months decreased 7.7 percent to $623.9 million, while "other revenue," which is "predominantly revenue from advertisements shown on screen prior to film screenings and revenue from booking fees associated with the purchase of tickets online," rose 2.4 percent to $258.5 million.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell 11.8 percent in the first half of the year to $488.5 million. Cineworld's first-half after-tax profit came in at $200.8 million or $162.5 million on an adjusted basis.

The company on Thursday also said it was "on track to achieve expected synergies of $150 million" from the Regal deal and "will continue to identify further cost saving opportunities and initiatives."

Said Mooky Greidinger, CEO of Cineworld: "In July, we launched our highly anticipated Unlimited membership program in the U.S., using our proven and successful experience with Unlimited in the U.K. to deliver value for cinema lovers everywhere. Supported by a strong box office performance in July and a very encouraging second half release schedule, we maintain our outlook for the full year performance of the business. Very strong admissions for The Lion King demonstrated the ongoing popularity of the theatrical business around the globe, while Avengers: Endgame was the highest-grossing movie of all time. Still to come are It Chapter Two, Joker, Frozen 2, and one of the most anticipated movies in recent years, Star Wars: The Rise of Skywalker."