Cineworld narrows losses as Covid curbs ease

17th Mar 2022 07:03

(Sharecast News) - Film theatre operator Cineworld narrowed losses as lockdowns eased globally and expected a strong return to trading in March after a hit from the Covid Omicron strain, but warned of uncertainties of its ability to pay down debts.

Pre-tax losses for calendar 2021 came in at $708m compared with a loss of $3bn a year earlier. Revenue more than doubled to $1.8bn as moviegoers returned to cinemas with the release of blockbusters like Spiderman - No Way Home in the final quarter of the year.

Net debt excluding lease liabilities increased by $492.7m to $4.8bn due to the impact of the pandemic and fund raising undertaken by the group during the year.

Cineworld said it was looking at cash-raising options after warning that was "material uncertainty" over its ability to pay down debt as it faced a a bill of more than $900m in damages for pulling out of its $2.1bn attempted takeover of the Canadian group Cineplex, which it abandoned in June 2020.

The company is appealing against the Canadian court's decision but said that the liability was not yet on its balance sheet as it expected a decision after June 2023 - which is the end of its financial assessment period.

"In the event that Cineworld is unsuccessful on appeal, the group would not have sufficient liquidity to pay the existing level of damages awarded."

The company said January and February trading was impacted by Omicron and lack of major movie releases but it anticipated "strong trading starting March 2022 supported by a strong and full film slate".

"Although the COVID-19 pandemic continues to impact our global operations, we are encouraged by our return to trading, the continued recovery seen across our industry and the return to profitability and cash flow generation in the fourth quarter of 2021," said chief executive Mookie Greidinger.

"The success of Spiderman - No Way Home which is now the 6th biggest movie of all time globally and third-biggest movie in the US while Omicron was emerging across the globe demonstrates the love and loyalty to the big screen."

Hargreaves Lansdown analyst Susannah Streeter said trading in Cineworld shares had been volatile on Thursday "as investors asses the chain's ongoing problems" from Omicron to film production delays due to extra pandemic precautions impacting the pipeline of new movies.

"It's now counting on other superheroes and fast jet pilots to fly onto screens to help boost bookings over the coming months, with a fresh billboard of Marvel movies and the highly anticipated prequel to Top Gun set to hit screens," she said.

"The chain is clinging onto hopes that these will be the lifelines to help bookings snap back to better health this year, to help it cope with its crippling level debt. But a fresh horror story could still unfold if the company loses its appeal over the huge fine it was slapped after pulling out of the Cineplex deal."