Cineworld horror show as it swings to huge loss
CINEWORLD shares bombed after it laid bare the effect of months of closures and delayed blockbuster releases since coronavirus struck.
The cinema chain, which has 9,300 screens at 767 theatres worldwide, swung to a £2.2bn loss in 2020, down from a profit of £155m the year before.
It makes about three- quarters of its sales in the US – with 15pc coming from the UK and Ireland.
Turnover tumbled by 81pc and the number of people visiting its cinemas by 80pc, to 54.4m.
Cineworld’s sites were forcibly closed for months during strict lockdowns, but it made a shock move in October by voluntarily shutting its sites after the next James Bond film, No Time To Die, was delayed for a second time.
Its numbers were eye-watering, but largely expected. What was more difficult for investors to swallow was a warning that there is ‘significant doubt’ about the company’s ability to survive if the pandemic becomes more severe and cinemas are closed again later this year. It also raised the prospect of more funding. Although Cineworld has arranged an emergency £156m loan, it also said it would ask shareholders for permission to raise its debt ceiling next month. And it warned that it might need to ask investors for yet more cash.
Cinemas in the US are expected to open next month and in the UK and the rest of the world in May.
Chief executive Mooky Greidinger struck a bullish tone, saying he wanted to ‘leave 2020 behind’ and expects a strong summer.
He said: ‘Last year the only big release we really had was Tenet and this year, with Bond, the new Top Gun and Matrix films, that will get people fired up again for the cinema experience.’ But this wasn’t enough for spooked shareholders and Cineworld fell 7.6pc, or 7.8p, to 95p.
UK and Malaysia-focused energy group Enquest also racked up a loss last year after lockdowns lowered demand for oil, sending crude prices plummeting. It posted a loss of £15m, from a profit of £323m in 2019, with shares tumbling 6.8pc, or 1.36p, to 18.74p.
The FTSE 100 fell 0.6pc, or 38.06 points, to 6674.83, while the FTSE 250 also finished the session down 0.6pc, or 124.7 points, at 21277.84.
Compass, the world’s largest catering firm, struggled in 2020 – and suffered a hit to its reputation when it bungled a free school meals contract in the UK. But it said its margins have been improving since the start of this year.
This means it stands to make higher profits from its revenues. It warned that first-quarter turnover stands to fall by 31pc compared with last year – which included almost three pre-pandemic months – but investors greeted the trading update warmly, with Compass finishing up 1.1pc, or 16p, at 1486p.
The market was less impressed with record revenues at semiconductor chip maker IQE (down 15.2pc, or 11p, to 61.6p), but snapped up shares in Sir Martin Sorrell’s digital advertising agency S4 Capital (up 2.9pc, or 14p, to 502p) as turnover and profits surged.
Petra Diamonds shares ( up 0.4pc, or 0.01p, to 1.42p) shrugged off claims that security guards at its mine in Tanzania had shot at people with metal balls rather than the rubber projectiles they were supposed to use. Petra has been investigating alleged human rights abuses since last year.
The company said it was already examining the latest details.
Online trading platform CMC Markets (up 2.9pc, or 13p, to 457p) has managed to retain many of the customers who joined last year to take a punt on stock markets thrown into turmoil by the Covid crisis. It also said that profits for the year to March are set to beat expectations of £400m.