Cineworld looking ahead to strong recovery in Q4
Cineworld has announced its H1 results, confirming the impact of lockdown restrictions on the company’s balance sheet.
During the first half of 2021, Cineworld’s revenue fell by 59% to $292.8m, down from $712.4m the year before.
The company confirmed an adjusted EBITDA loss of $21.1m too, compared to a profit of $53m last year, a fall of 140%.
Lockdown restrictions resulted in closures across the cinema chain’s locations for a large part of the first half of the year.
The number of people admitted to Cineworld cinemas came to 14.1m, a fall of over 70% compared to the year before.
Cineworld has taken out further loans to support itself and its debt burden will be an additional challenge through the recovery period.
However, the majority of Cineworld’s locations are open again and the company is expecting a strong trading performance during the last months of the year.
Harry Barnick, Senior Analyst at Third Bridge, detailed a number of obstacles that stand in the way of Cineworld making a full recovery.
“With cinemas now open, limited capacity constraints and a strong content pipeline, Cineworld is hoping for a strong recovery in Q4.”
“However, some estimates suggest that box office revenues will be 10% lower post-covid permanently as customers have grown accustomed to watching films at home, studios have shortened the theatrical window and exhibitors have permanently closed the curtains on unprofitable cinemas.”
“You may have 20-30% of cinemas making 80% of the EBITDA, so Cineworld can afford to close underperforming cinemas depending on the rental contract. In total, Cineworld may end up closing up to 5% of its estate.”
The Cineworld share price is up by 7.22% during the morning session on Thursday.
