Cinema giant warns of uncertain future after huge losses

Cinema giant Cineworld has revealed an annual loss of more than $3 billion (£2.2bn) after closing its sites amid the pandemic, but is hopeful of strong pent-up demand once they reopen.

The chain, which also owns the Picturehouse franchise that includes Edinburgh’s famous Cameo cinema, swung to the 2020 loss from a pre-tax profit of $212.3 million in 2019 after revenues plummeted by 80 per cent and admissions tumbled from 275 million to 54.4 million.

However, the group said it is hopeful of a recovery thanks to vaccine progress and “strong pent-up demand” once its cinemas open in the US from April 2, in the UK from May 17, and the rest of the world also in May.

But it continued to warn of “material uncertainties” over its ability to continue as a going concern, given the potential for further disruption to its sites and the release of films during the crisis.

Chief executive Mooky Greidinger told investors: “For all of us across the world, this has been an incredibly challenging year. Covid-19 has created a huge amount of stress and uncertainty, both in business and in our personal lives.

“At Cineworld, I never imagined a time that we would see the closure of our entire cinema estate, nor that varying restrictions would remain in place for so long as we continue to navigate our way through this crisis.

“I am immensely proud and inspired by the response of our people to these very difficult circumstances. We have worked hard to strengthen the long-term prospects of the business and, looking forward, Cineworld enters 2021 confident about the next chapter in our development; not least the intention to reopen our cinemas starting April 2.”

The group’s entire 767 cinema estate has been shut for lengthy periods since last March.

But it said: “Looking forward, the outlook is more positive, with restrictions expected to ease in light of the vaccination programmes under way across our territories.”

The group also separately announced moves to boost its balance sheet by another $213m through a bond fundraising.

Cineworld Group was founded in 1995 and listed its shares on the London Stock Exchange in 2007. Globally it operates 9,548 screens across 793 sites.

The phased reopening in the US will start with a limited number of cinemas opening for Godzilla vs. Kong on April 2, followed by screenings of Mortal Kombat from April 16.

Susannah Streeter, senior investment and markets analyst at financial services firm Hargreaves Lansdown, said: “The annual loss, the first in its history, comes as little surprise, given how Covid has played out as a highly depressing story for the industry, with revenue streams completely drying up.

“The numbers are eyewatering, with losses totalling just over $3bn for the year compared to a $212m profit last year. Crawling back to profitability after such a big hit will require almost superhero levels of effort and the company has warned that material uncertainty around its ability to continue as a going concern remain,” she added.