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FTSE: Cineworld expects admissions to take at least two years to recover

File photo dated 18/06/20 of a Cineworld cinema in Northampton, as Cineworld has warned audience numbers have been weaker than expected and predicted they will stay low until November due to
Cineworld said that it expects sales to take at least two years to return to pre-COVID levels after worse-than-expected trade in its latest quarter. Photo: Press Association

Cineworld (CINE.L) admitted on Friday that it expects sales to take at least two years to return to pre-COVID levels after worse-than-expected trade in its latest quarter.

The struggling cinema chain said that its cash reserves shrank by almost two-thirds over the first half of the year, with admissions in the three months to September “below expectations”.

It recorded $131m (£118m) in cash at the end of June, compared to the $354m it had at the end of December last year, while it reduced its losses from $576.4m to $364.9m.

In addition, the group, which also owns the Picturehouse cinema chain in the UK and the Regal chain in the US, expects a “lower volume of theatrical releases in 2023 and 2024” as productions switch to streaming platforms.

However, it expects some improvement at the end of this year with the releases of Black Adam, Black Panther: Wakanda Forever, and Avatar: The Way of Water.

A number of DC films including The Flash and Aquaman 2 have been pushed back to 2023 due to production delays.

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“This has been a challenging period for Cineworld due to the unprecedented impact of the COVID-19 pandemic on our business and its lagging and continuing disruption to film schedules,” Mooky Greidinger, chief executive, said.

“COVID-19 continued to weigh on our trading during the half-year, although we have been encouraged by the gradual ongoing recovery in our performance over recent months – as pandemic restrictions ended, guests returned for popular movies.”

Shares were 4.2% lower in London, before recovering slightly, meaning the stock has lost 90% in the year-to-date.

It comes as the firm filed for special bankruptcy in the US as it seeks to restructure the business. It blamed a limited film slate for weak audience numbers.

The group was previously ordered to pay Canadian rival Cineplex more than £700m in damages for abandoning a planned takeover.

It was taken to court after it pulled out of a 2019 deal which would have seen it become North America’s biggest cinema operator.

The Canadian court ruling denied Cineworld’s counterclaim, citing breaches in the merger agreement. A legal fight over the damages is ongoing.

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Cineworld has more than 9,000 screens globally, and operates in 10 countries including the US and the UK. It admitted about 95 million moviegoers in 2021, up 75% over 2020, but well below the 275 million seen before the pandemic.

“Shareholders in Cineworld already face being virtually wiped out in any debt restructuring but the creditors who will end up controlling the business didn’t have much to be happy about either in Cineworld’s latest update,” AJ Bell investment director Russ Mould said.

“Alongside first-half results showing a recovery in revenue and profit, unsurprising given the comparison was with a COVID restrictions blighted period, it is revealed that Cineworld has continued to haemorrhage cash and the company has revised down its expectations on admissions.

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