Cineworld Cuts First Half Operating Loss to $209 Million, Remains Bullish on Release Windows, Mulls U.S. Listing
Regal Cinemas owner Cineworld has recorded an operating loss of $209 million in its interim financial results for the six-month period ended June 30, 2021.
The group’s results for the period include a period of temporary closures from January to May 2021 due to COVID-19 restrictions and a limited film slate.
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The operating losses were lessened by asset impairment reversals of $95.6 million resulting from lease modifications. The operating losses are vastly lower compared to the same period in 2020 when the group posted a loss of $1.34 billion.
Group revenues were $293 million, down from 2020’s $712 million and group adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization showed a loss of $21.1 million, down from an EBITDA profit of $53 million in 2020, as the period was severely impacted by closures.
The results noted a cash burn of $271 million during the period, averaging approximately $45 million per month, supported by positive working capital in June. As of June 2021, the group had cash of $437 million, which was strengthened by an additional term loan with principal value of $200 million raised in July.
The group’s net external borrowings less cash were $4.63 billion, up from $4.55 billion at the end of 2020.
Cineworld is also considering listing some or all of its business in the U.S. in order to gain access to more liquidity. “U.S. equity capital markets are the largest and most liquid in the world and include a large number of publicly listed cinema companies including peer group companies,” said Cineworld CEO Mooky Greidinger during an earnings call.
“The board is therefore considering options to maximise shareholder value now and into the future by accessing this liquidity through a listing of Cineworld or partial listing of Regal in the U.S.”
The share price of Cineworld’s direct competitor, the U.S.-listed AMC, has shot up after it became a so-called “meme stock” for investors.
Addressing the ongoing discussions around theatrical release windows, the group noted: “In view of the situation related to COVID-19, the studios entered into various experiments which we believe ultimately will lead to a situation whereby there is a theatrical window but it is shorter than in the past and dependent on the theatrical revenue potential of the movie itself. Currently, movies are being released with windows that are anywhere between 0-60 days. We expect that by 2022, the window will stabilize to somewhere between 20 and 60 days, but subject to each movie’s potential.”
The group took a positive view of the upcoming release slate and talked up the prospects of the four new Marvel movies as well as “Top Gun Maverick,” the new James Bond film, the fourth Matrix film and “Dune.”
The group operates in 10 countries including the U.S. and the U.K. with 759 sites and 9,269 screens globally.
Mooky Greidinger said: “Despite the challenges, the actions we have taken have ensured that Cineworld has emerged a more focused business with significant liquidity and a clear vision for the future. Trading has been encouraging since we started to re-open our sites in April and it has been great to have our teams back, doing what they do best, and welcoming customers back into our cinemas.”
“I am confident that the business is in a strong position to execute its strategy and deliver a return to growth as we recover from the pandemic and capitalize on the forthcoming strong film slate alongside clear pent-up consumer demand,” Greidinger added.
Alicja Kornasiewicz, chair of Cineworld Group plc, said: “Cineworld has continued to deliver strong operational and cash control despite the challenging trading conditions.”
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