Cineworld pays heavy price for closing its sites
SHARES in Cineworld plunged by as much as 60pc after the company said it was closing its venues again as a shortage of film releases triggered a collapse in demand.
The world’s second-biggest cinema chain said it was left with no other choice after movies such as the next James Bond film were delayed by the coronavirus.
It plans to temporarily close 127 cinemas in the UK and 536 in the US from Thursday, with the announcement sending its shares tumbling 60.3pc to a record low of 15.6p at one stage. They finished 36.2pc, or 14.27p, down at 25.2p – wiping £200m off its value.
Cineworld boss Mooky Greidinger said operations might resume in ‘two months, or a bit longer’, as some movies such as Wonder Woman 1984 are still slated for a Christmas release.
Last month it revealed a £1.3bn first-half loss, largely due to crippling closures of its cinemas during lockdown.
Since being allowed to reopen, however, the picture has been just as bleak.
Social distancing restrictions have led to disappointing box office takings, as families stay at home. Many studios have put back releasing films in a bid to get bigger audiences later on.
Greidinger told Sky News: ‘ We were bleeding much bigger amounts when we are open than when we were closed.’
Russ Mould, investment director at AJ Bell, said: ‘ Cineworld and other operators have tried to get the message across that their theatres were safe and clean, but that communication hasn’t been enough.’
The FTSE 100 index rose by 0.7pc, or 40.82 points, to 5942.94, after data suggested the UK economy slowed less than expected in September despite new coronavirus restrictions.
Britain’s blue- chip index was also boosted by news from the US that Donald Trump could soon be discharged from hospital, and lawmakers are close to agreeing a pandemic relief package.
Housebuilders shared in the good cheer after Boris Johnson promised fresh support for firsttime buyers.
The Prime Minister said he wanted to help create ‘generation buy’ with measures encouraging banks to offer mortgages that require smaller deposits.
It helped Persimmon shares rise 2.4pc, or 61p, to 2597p, with Barratt Developments up 4.1pc, or 20.3p, to 511.4p and Taylor Wimpey up 1.4pc, or 1.5p, to 110.8p.
Vodafone rose 4.7pc, or 4.86p, to 107.68p after the telecoms giant revealed it had hired a top German industrialist as chairman of its new masts and towers division, which is being separately listed next year. Rudiger Grube, the former boss of rail giant Deutsche Bahn and of car maker Daimler, will lead the supervisory board of Vantage Towers as it prepares to float in ‘early 2021’.
He has experience running big, expensive infrastructure projects, while Vodafone noted he is wellconnected in political and business circles. Elsewhere, the FTSE 250 climbed 1.1pc, or 187.28 points, to 17,583.09.
But food-to-go maker Greencore Group was down 6.7pc, or 6.8p, at 95p after warning its annual revenues were set to fall from £1.5bn to £1.3bn. It said underlying profits would drop from £142m to £85m, a hit that includes £10m of costs tied to the pandemic.
Greencore said that it has seen a rise in demand since the UK economy started to reopen but that it recognised ‘the uncertainties that lie ahead’.
It was hit by the closure of its Northampton factory in August following an outbreak of Covid-19 but production was restored by mid-September.