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Regal Owner Cineworld: Admissions to Remain Below Pre-Pandemic Levels in 2023 and 2024

The Hollywood Reporter 9/30/2022 Georg Szalai
© Scott Olson/Getty Images

Exhibition giant and Regal owner Cineworld Group, which recently filed for Chapter 11 bankruptcy proceedings in the U.S., predicted Friday that cinema admissions in 2023 and 2024 would remain below levels recorded before the COVID-19 pandemic.   

Third-quarter admissions have been “below expectations,” with the fourth quarter “anticipated to be stronger, supported by the scheduled release of Black AdamBlack Panther: Wakanda Forever, Avatar: The Way of Water and other blockbuster films,” the second-largest movie theater chain said in an update on its first-half 2022 financials. “Cinema admissions in both fiscal year 2023 and fiscal year 2024 are expected to remain below pre-pandemic levels.”  

Cineworld said that it has “revised down its short- and medium-term cinema admission forecasts,” explaining that “the review was prompted by the slower-than-expected recovery being experienced in 2022 combined with external forecasts indicating a lower volume of theatrical releases in 2023 and 2024.”

In March, it had disclosed a “base case scenario,” in which it forecast admissions “to remain on average 5 percent below 2019 levels throughout 2023 and to recover to 2019 levels in 2024.”

Cineworld shared its updated forecast Friday as it reported a revenue gain for the first half of 2022 and a swing to an operating profit, helped by “steadily increasing admission levels and strong average ticket prices and spend per person.” Admissions for the January-June period hit 82.8 million, up from 14.1 million in the same period of 2021, which had included “a period of temporary closures from January to April/May 2021 due to COVID-19 restrictions and (a) limited film slate.”

The company on Friday reported that its revenue for the first six months of 2022 amounted to nearly $1.52 billion, while the revenue for the same period in 2021 had only reached $292.8 million.

Cineworld swung to an operating profit for the six months of $57.3 million, compared with a year-ago loss of $208.9 million. Its net loss before tax of $364.9 million narrowed from a loss of $576.4 million for the same period in 2021.

Cineworld’s net debt as of June 30, 2022 stood at $8.807 billion, compared with $8.435 billion as of June 30, 2021 and $8.877 billion as of Dec. 31, 2021. The company reported having $131 million in cash as of the end of June, compared with $354 million as of the end of 2021.

The London-headquartered company operates the Regal cinemas in the U.S., as well as Cineworld and Picturehouse venues in the U.K. Overall, it operates 747 sites and 9,139 screens in 10 countries, meaning that investors, Hollywood and other exhibitors are keeping close tabs on its future.

“While monthly admission levels progressively recovered in the first half of 2022, they remained below both pre-pandemic levels and the group’s original forecast for 2022,” Cineworld also said Friday. “This led to a general tightening of the group’s overall liquidity position.”

As a result of the admissions expectations, Cineworld said it also performed a “half-year impairment assessment.” In accounting, an impairment is a permanent reduction in the value of an asset. “As a result of this assessment, it was determined that the positive variance between the recoverable amounts and the balance sheet carrying values had reduced significantly from the assessment performed at December 31, 2021 but that no intangible asset impairments were required,” the firm said. “As the year progresses, management will continue to monitor performance and re-assess its short-, medium- and long-term forecasts appropriately. A downwards revision to its long-term forecast would most likely lead to a material impairment of goodwill.”

For the first six months of 2022, Cineworld on Friday disclosed that it recognized impairments totaling $66.3 million, including $29.4 million related to property, plant and equipment and $16.7 million related to “right-of-use assets.” In addition, it recognized a $20.2 million impairment relating to its investment in National CineMedia, which sells advertising time before movie screenings and was “severely impacted by the COVID-19 pandemic.”

Debt-laden Cineworld, led by CEO Moshe “Mooky” Greidinger, had said in an Aug. 17 statement that it was eyeing strategic options as it was struggling to get through the summer doldrums for Hollywood tentpoles in its theaters.

“COVID-19 continued to weigh on our trading during the half-year, although we have been encouraged by the gradual ongoing recovery in our performance over recent months — as pandemic restrictions ended, guests returned for popular movies,” Greidinger said in Cineworld’s Friday update. “The performance of key blockbusters in the first half, including Top Gun: Maverick, Doctor Strange in the Multiverse of Madness, Jurassic World Dominion, The Batman, illustrates the continued demand for such special cinematic experiences.”

But he also noted: “Despite these encouraging signs and a highly anticipated slate of movies later this year, we needed to strengthen our balance sheet and liquidity position after the deep and unprecedented impact of COVID-19. We therefore commenced a Chapter 11 restructuring process in the U.S. to implement a de‐leveraging transaction that will provide the financial strength and flexibility to accelerate, and capitalize on, Cineworld’s strategy. As we navigate this Chapter 11 process to help position Cineworld for long-term growth, we remain committed to our strategy to be ‘The Best Place to Watch a Movie’.”

Cineworld had said recently that the filing of a proposed plan of reorganization with the bankruptcy court would happen “in due course,” with the goal to emerge from Chapter 11 “as expeditiously as possible,” the firm said back then. “Cineworld currently anticipates emerging from Chapter 11 during the first quarter of 2023 and is confident that a comprehensive financial restructuring is in the best interests of the group and its stakeholders, taken as a whole, in the long term.”

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