Cineworld to reveal sales impact and pace of recovery after cinema closures

PA

Cineworld is set to reveal the extent of the hit on its profits and revenues over the past six months, as cinema attendances gradually recover following the coronavirus pandemic.

The group is expected to post significantly lower sales due to the enforced closure of sites, but investors will be hopeful of positive early attendance figures.

It will update shareholders on the first two months of trading since reopening UK sites, when it reveals its figures for the first six months of 2020 on Thursday September 24.

Last month, analysts at Peel Hunt said they believe “cinema attendance will bounce back strongly even with Covid-19 security measures in place”.

However, they stressed that a key assumption is that revenue in September will be around 50% of the same month last year.

Peel Hunt predicted the group will still secure earnings before tax and interest of 318 million dollars (£245 million) in 2020, despite the slump in revenues.

While there were a number of high-profile releases taking place in August and September, most notably Christopher Nolan’s Tenet, some titles were pushed back in the year.

Trading sentiment in cinemas also dipped this summer after Disney decided, at short notice, that it would release its live-action Mulan film – which had been expected to secure strong family audiences – on its Disney+ streaming platform instead.

Emilie Stevens, equity analyst at Hargreaves Lansdown, said it “won’t make comfortable viewing for Cineworld” if the trend towards more releases on streaming platforms continues.

“Attendance was already in decline pre-pandemic and, with cinema treats and advertising making up just over 40% of total revenue last year, a lot is riding on people still choosing the cinema as a destination, but that could be set to change,” she added.

On the same day, smaller rival Everyman, which runs 33 sites, will unveil the impact of restrictions on its own financial performance.

Cinemas across the UK were eager to gradually open sites after receiving the green light in July but are also likely to impacted by further local lockdowns, while speculation over a potential late-night curfew could also throw a spanner in the works.

Alongside tackling difficult trading conditions, Cineworld is also facing a major legal battle after its 2.1 billion dollar deal to buy Canadian chain Cineplex fell through.

In July, Cineworld said it would counter-sue Cineplex to “vigorously defend” claims it breached its obligations to complete the acquisition when it terminated the deal a month earlier.

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