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Regal Entertainment owner Cineworld has reported a revenue decrease of 11.1% for the first six months of 2019, to $2.15B from $2.42B in the comparable period last year. The dip at the world’s second-largest exhibition chain was anticipated, it said, due to the timing of major film releases versus the first half of 2018. Encouraged by the second-half 2019 release schedule, the company said performance for the full year remains in line with expectations.
Overall, first semester admissions were down 14.4% to 136M while box office takings were $1,268.8M for a 14.9% decrease. Concession revenue was off by 7.7% to $623.9M, and other income (screen advertising, booking fees) jumped 2.4% to $258.5M. Cineworld shares on the London Stock Exchange were off by about 4% just before 9:30AM UK time today, before beginning a rebound.
(The Cineworld results to June 30 are on a pro-forma basis, reflecting performance if Regal, which it acquired for $3.6B last year, were included across the full six-month frame of 2018.)
During the first half of the year, Cineworld said it opened seven sites that added 90 screens (56 in the U.S., 22 in the UK and 12 in Bulgaria). As of June 30, the group had a total of 786 sites for 9,494 screens and expects to open a further 9 sites (86 screens) by the end of 2019.
Regarding the difference in major releases globally, last year’s first half included Black Panther, Avengers: Infinity War and Jurassic World: Fallen Kingdom which were the three top grossers of 2018. While April’s Avengers: Endgame has become the biggest movie of all time, the No. 2 movie of 2019, The Lion King, did not release until July, so is not counted in today’s results.
Said Cineworld CEO Mooky Greidinger, “The business is performing as expected and we are confident in meeting our expectations for the full year. We remain focused on implementing our strategy, with refurbishments and synergies on track. Investing in technology and customer experience continues to be a key pillar of our strategy… 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.”
He also noted that since the July launch of Regal Unlimited in the U.S., its subscription rate has “exceeded expectations.”
In the U.S., total revenue fell 13.8% which includes an admissions decrease of 18.5% on a pro-forma basis during the six-month period to June 30. Box office was worth $941.8M, a 17.9% drop. Following the acquisition of Regal, 11 U.S. sites were closed in the first half which also partly affected admissions, Cineworld said.
The refurbishment program following the Regal acquisition has six sites currently undergoing changes and more than 60 further development agreements. Four refurbishments were completed in the UK, in addition to the extension at The O2 in London — which is now the capital’s largest cinema with 19 screens and 4,500 seats.
Cineworld reduced debt ahead of schedule with a repayment of $570M on term loans It is also on track to achieve expected synergies of $150M while management continues to identify further cost saving opportunities and initiatives.
In the UK and Ireland, total revenue decreased 5.2% on a constant currency basis with revenue from admissions down 8.2%. Similar to the U.S., the performance comps to a very strong early 2018. The Top 5 grossing films in the first six months of 2019 were Endgame, Captain Marvel, Aladdin, Toy Story 4 and Dumbo for a total $213.7M versus last year’s Top 5 which made $237.5M.
In the rest of Cineworld’s markets, total revenue rose 3.4%. Admissions decreased by 1.3% with a turnstile revenue hike of 1.8%. Ticket sales in Czech Republic, Bulgaria and Slovakia increased from the prior year while Romania was flat. Poland, Hungary and Israel experienced drops. Poland had a very strong first-half of 2018 supported by local title Kobiety Mafii. In Czech Republic, the second biggest release in the most recent semester was Ženy B Běhu, reflecting the continued popularity and importance of homegrown fare. Overall, the most successful films in the period across the ROW were Endgame, Captain Marvel and Aladdin.