Yahoo Finance Coronavirus: Pandemic pushes Cineworld to $3bn blockbuster loss
Cineworld (CINE.L) announced on Thursday that it swung to a worse-than-expected $3bn (£2.2bn) annual loss, compared with a profit of $155.2m in 2019, as lockdown restrictions kept its doors closed to the public.
The cinema chain, which operates more than 600 movie theatres including the Odeon chain in the UK, posted revenues of just $852m last year, a 80% fall from its $4.3bn pre-pandemic level.
Shares plummeted as much as 12% in London as the company added that material uncertainty remained around its ability to continue as a going concern.
However, Cineworld said it was hopeful of "strong pent-up demand" from cinema-goers once its theatres open in the US from 2 April, in the UK from 17 May, and the rest of the world.
Cineworld also revealed it had secured commitments for a new $213m convertible bond to safeguard itself from a further hit due to the ongoing crisis.
“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,” Mooky Greidinger, chief executive of Cineworld, said.
“Nor that varying restrictions would remain in place for so long as we continue to navigate our way through the crisis.”
Russ Mould of AJ Bell said: “It may not have been able to show any big films for a while but the losses Cineworld has unveiled this morning are truly blockbuster.
“It’s no surprise that the cinema operator is raising funds yet again to boost the buffer it has to ride out a period when it essentially isn’t selling any tickets. There is also little room for the pace of reopening in the UK and US to slow before the company might need to go cap in hand again.”
READ MORE: Cineworld to reopen cinemas in the US and UK
The Regal and Picturehouse cinema owner was forced to temporarily shutter its entire UK estate of 127 sites last October, putting 45,000 people out of work.
The industry had been rattled by a number of blockbuster film delays, such as Marvel’s Black Widow and the latest James Bond film No Time To Die.
The 25th Bond film was initially due to be released in cinemas in April 2020 but was then pushed back until November. Beverly Hills-based MGM, the Hollywood studio behind James Bond, has now pushed the film back for a third time from April to October 2021.
The film, which cost $250m (£191m) to produce, was forecast to gross more than $1bn worldwide.
Disney’s live-action remake of Mulan also dealt a major blow to Cineworld last year after releasing the film on its streaming service instead of in cinemas.
The film debuted in September at a cost of $29.99 per customer, and only played in theatres in countries that did not have launch plans for Disney+.
READ MORE: Cineworld hit with shareholder revolt over £208m share scheme
Earlier this week, Cineworld announced that it had secured a deal with Warner Bros, starting in 2022, which will give it limited exclusivity for 45 days in the US and 31 days in the UK. Certain films will premiere in UK cinemas exclusively for 45 days if they sell an agreed number of tickets.
Harry Barnick, senior analyst at Third Bridge, said: "The novelty factor of so many leisure and shopping activities opening again is going to mean a prolonged fight for consumer attention. This will play out against a backdrop of multiple movies being released in quick succession and some of the public retaining an aversion to confined spaces."
"For cinemas, it looks like a slow-mo recovery featuring a lot of single-site closures and further consolidation."
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