UK-based exhibitor Cineworld Group has posted a pre-tax loss of $1.6bn as a result of the pandemic and warned there is “no certainty” regarding the future impact of the virus on the company.
The leading multiplex exhibitor, which also owns US cinema chain Regal, reported that group revenue was down 67% in the six months to June 30 to $712.4m, from $2.15bn in the same period last year.
With all 778 sites across 10 countries closed between mid-March to late June, as countries around the world went into lockdown due to the Covid-19 pandemic, admissions fell from 136 million to 47.5 million.
Cineworld has now reported 561 sites have reopened to date but 200 theatres in the US (mostly in California and New York), six in the UK and 11 in Israel remain closed.
In a statement, the exhibitor said: “There can be no certainty as to the future impact of Covid-19 on the Group. If governments were to strengthen restrictions on social gathering, which may therefore oblige us to close our estate again or further push back movie releases, it would have a negative impact on our financial performance and likely require the need to raise additional liquidity.”
Cineworld raised additional liquidity of $360.8m during the period and said Warner Bros. blockbuster Tenet and local films had driven a steady increase in business.
“The impact of Covid-19 on our business and the wider leisure industry has been substantial, with the closures of all of our cinemas worldwide for an extended period,” said Cineworld Group CEO Mooky Greidinger. “During this unprecedented time, our priority has been the safety and health of our customers and employees, while at the same time preserving cash and protecting our balance sheet.”
Greidinger said the company had been reducing and deferring costs where possible; making use of government support schemes for its 37,000 employees; partially delaying capital investments; and suspending Cineworld’s dividend.
“Current trading has been encouraging considering the circumstances, further underpinning our belief that there remains a significant difference between watching a movie in a cinema – with high-quality screens and best-in-class sounds – to watching it at home,” he added.
“As part of this, our policy regarding the theatrical window remains unchanged as an important part of our business model, and we will continue to only show movies that respect it. While there continues to be a lot of uncertainty, we have a dedicated and experienced team that is focused on managing business continuity while taking advantage of the strong slate currently planned for the months ahead.”
The interim results also referenced a proposed $2.1bn deal to acquire Canadian giant Cineplex, which Cineworld terminated in June. Cineworld blamed this on “breaches by Cineplex of the arrangement agreement”.
Cineplex denied these breaches and initiated proceedings against Cineworld for stepping away from the deal, which it believes was abandoned as a result of the economic impact of the virus crisis. Cineworld has since filed a counterclaim.