Kinowelt, the fast expanding distribution and production group, underlined its growing strength by reporting a 159% increase in pre-tax profit, from $9.9m (DM20.1m) in 1998 to $25.6m (DM52m) in 1999.

Turnover climbed 76% from $103m (DM210m) to $182m (DM370m) over the same period. Operating margins widened from 10% to 14%. The company is due to report post-tax profit in May.

Kinowelt finance director Eduard Unzeitig attributed the growth to film distribution, home entertainment and film sales. He added that the company's share of the German film distribution market more than doubled in 1999 to 11% and that the group's investment in DVD is beginning to pay off and will have a greater impact in the current year.

"We expect to show further dynamic growth. This will come particularly from the DVD sector, the co-operation with top US film producers, the planned expansion of our pan-European distribution network and the full integration of Sportwelt. The impact of our 26% interest in Alliance Atlantis will also be positive for the future results of the Kinowelt Medien Group."

The company's shares moved up 2% to Eu52 in response to the results, giving it a market capitalisation of Eu1.27bn. Kinowelt recently moved to reassure investors after its shares dipped sharply in January after it announced plans for a commercial TV channel and warned that the launch may dent margins in 2001. It forecast the channel will be profitable from 2003.

Kinowelt is in talks with leading independent distributors in France and Spain to complement its existing distribution network, which includes the UK and Canada through Alliance Atlantis and Germany and Eastern Europe. The company is understood to be looking for a partner in Italy. Spanish powerhouse Lolafilms looks likely to handle Spain following Kinowelt's recent acquisition of four Lola features last month.

Kinowelt and its distribution allies look to gain access to high-profile US pictures through Kinowelt's US production venture under Chris Sievernich and its Hollywood joint venture with Alliance.