Cineworld Group, the world’s second-largest exhibitor and owner of Regal in the U.S., saw significant improvement in 2021 versus 2020, as revenues rose by nearly 112% to $1.805 billion, the company said this morning as it reported full-year results in London. Operating profit also rebounded, reaching $15.8 million, up from a 2020 loss of $2.258 billion. The group overall recorded a $708.3 million pre-tax loss across the Covid-impacted year in which cinemas were closed for most of the first half. This was a substantial improvement on the 2020 loss of just over $3 billion.
The results for the year ended December 31, 2021, which include U.S., UK and rest of world operations, demonstrate resilience in a very challenging market, the company said. Cineworld noted it has strengthened its liquidity position, raising over $424.9 million and receiving $203 million under the United States Cares Act tax refund in 2021. Net debt (excluding lease liabilities) increased by $492.7 million to $4,837.2 million.
Notably, the fourth quarter of 2021 saw strong trading powered by a slate of major tentpoles including Sony/Marvel’s Spider-Man: No Way Home and MGM/Eon/Universal’s No Time To Die which resulted in positive cash flow.
Total admissions for the group increased by 75.2% year on year to 95.3 million, reflecting the length of closures required due to Covid in 2020 and 2021 and film content available in each year. Breaking down admissions, Regal Cinemas in the U.S. welcomed 56.2 million moviegoers, up from 30.1 million in 2020, but still widely down from pre-pandemic 2019’s 177.3 million. Cinemas in the U.S. remained temporarily closed until April 2 when the group began the reopening process. As of December 31, the group operated 511 theaters in the U.S.
Box office revenue at Regal increased by 123.8% to $627.4 million in 2021, driven by an 86.7% increase in admissions and 19.9% increase in average ticket price. The hike in average ticket prices was primarily a result of the increased availability and uptake of premium format content during 2021 compared with 2020. Retail revenue was $391.9 million, a 143% jump. In the UK, total revenue was $348.1 million, repping a 126% spike while still 46.3% off 2019. Rest of world, including operations in Poland, Hungary, Romania, Czech Republic, Bulgaria, Slovakia and Israel were $236.5 million, a 93% improvement.
While January and February 2022 were impacted by the omicron variant and a lack of major releases prior to Warner Bros/DC’s The Batman, increased trading is expected ahead with a strong slate of major titles. The group said it continues to maintain tight control over its operating costs and cash usage and “is in a good position to benefit from the expected industry recovery.”
Since reopening, trading “has been encouraging and increasingly improving,” Cineworld said in its earnings statement. The $1.88 billion success of Spider-Man: No Way Home “demonstrates the love and loyalty to the big screen,” the group noted.
CEO Mooky Greidinger added, “Whilst our 2021 results still reflect the impacts of COVID-19, particularly at the start of the financial year, we are encouraged by the recent strong trading performance throughout the final quarter. It is clear that our customers remain loyal and have missed the big screen experience as well as the sociability of watching a movie with others. Our strong final quarter performance reflects the pent-up demand for affordable out-of-home entertainment and the record breaking film slate, including Spider-Man: No Way Home, which showcased the importance of cinematic releases. The business is well positioned to execute its strategy and capitalize on the highly anticipated movie schedule, which includes Avatar, Top Gun Maverick, Jurassic World: Dominion, Minions: The Rise of Gru, Doctor Strange in the Multiverse of Madness, Thor: Love and Thunder, Black Panther: Wakanda Forever, Bullet Train, Spider-Man: Across the Spider-Verse, Pixar’s Lightyear, Fantastic Beasts, Elvis and many more. I want to thank everyone across our team who make it possible for our customers to experience the best place to watch a movie.”
With regard to the Ontario Superior Court’s decision to award C$1.23 billion in damages to Cineplex, Cineworld has appealed and said it does not expect damages to be payable whilst any appeal is ongoing. No liability has been recognized in respect of the judgment.
Greidinger in his review also noted, “the main topic in focus throughout the pandemic was the length of the theatrical window. In light of COVID-19, the studios tried various experiments which led to a shortening of the theatrical window and is dependent on the theatrical revenue potential of each movie. In 2022, we anticipate movies will be released with windows that are anywhere between 20 to 60 days and subject to each movie’s potential. The influence of high-quality pirated copies of movies from PVOD day and date releases can also significantly affect a movie’s total revenue not only in cinemas but also in ancillary markets. As the most affordable out-of-home entertainment option, we believe that cinemas will continue to be the main driver of the industry, as they have been for so many decades despite the arrivals of new technologies, such as TV, Video, DVD and others.”
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