The chief executive of Cineworld declared “a new chapter in cinema history” yesterday as he shrugged off fears over the company’s financial position.
Mooky Greidinger said that the fourth quarter of last year had “made it clear that nobody is going to give up the cinema experience” and he was confident the recovery was on its way.
He added that two of the five biggest film of all time in the UK — the latest Spider-Man and James Bond franchises — had been released during the quarter, which he said gave him confidence in the future of the industry.
“If you look at the line-up until the end of 2022 and beyond, we are confident that recovery is on its way. People missed the cinema and we should be optimistic provided there are no new Covid surprises,” Greidinger, 69, said.
Cineworld expects to be back at pre-Covid levels of trading by the end of 2023, although Greidinger said that, given the strength of new films, the company could hit 2019 revenues in the remaining nine months of this year.
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From this year’s scheduled releases, he highlighted two Marvel films, Doctor Strange and Black Panther: Wakanda Forever, as well as Top Gun: Maverick, Jurassic World: Dominion and Avatar 2. “We’re confident we can open a new chapter in cinema history,” he said.
Cineworld, which started life in 1995, is the world’s second’s biggest cinema chain with 751 sites and 9,189 screens in ten countries under the Cineworld and Picturehouse brands. Having listed on the stock market in 2007, it completed a transformative deal in early 2018 to buy Regal, the second largest cinema chain in America, for $5.8 billion, although this has left it saddled with $8.9 billion of net debt including lease liabilities.
Its financial position could become even more perilous if it loses its appeal against damages in a legal battle with Cineplex, a Canadian rival.
Cineworld agreed a deal to buy Cineplex just before the pandemic but withdrew and the Ontario Superior Court of Justice awarded Cineplex damages of C$1.23 billion (£740 million).
Cineworld said it was confident the judge had erred but admitted yesterday that there was “a material uncertainty around the group’s ability to successfully appeal the judgment and avoid the damages payment”.
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Greidinger admitted that if it lost its appeal, it did not have the money to pay the sum. “If the decision is not reversed we’ll have to see what we do. I don’t want to speculate right now.”
Cineworld’s financial woes are outlined in yesterday’s auditor’s report. The group’s statutory accounts were unqualified although they included an “emphasis of matter in respect of material uncertainty around going concern”. One scenario paints a picture that would see covenants breached and the group unable to repay its $462.5 million revolving credit facility or continue as a going concern.
In the year to the end of December, a period that included temporary cinema closures from January to May 2021, revenues more than doubled to $1.8 billion, while underlying earnings swung to a profit of $454.9 million from a loss of $115.1 million. Admissions rose from 54.4 million to 95.3 million.
The current year started poorly due to Omicron and a dearth of big movies, while energy costs are being inflated by the war in Ukraine, albeit some are being hedged.
Cineworld shares fell 1¾p to 36¼p.
