Shares in Cineworld (LON:CINE) were strongly up after its first-half profit almost trebled thanks to the acquisition of US rival Regal Entertainment and the popularity of box office smashes such as Black Panther and The Greatest Showman.
The cinema group, which completed the £2.5bln purchase of Regal earlier this year making it the second largest cinema chain in the world, reported adjusted earnings (EBITDA) of $413.6mln in the six months to the end of June – up from $107.5mln a year ago – on sales of $1.86bln.
Cineworld shrugged off the impact of the FIFA World Cup and summer heatwave as pro-forma revenues grew 2.5% in the UK and Ireland, helped by the popularity of films such as Avengers: Infinity War, Black Panther and The Greatest Showman, said the company. Pro-forma revenues in the US, which now accounts for around 70% of its sales, grew 14.3% during the period.
Shares in the company were 6.9% up at 295.4p in early trade.
“We are upgrading our full-year forecasts by 6%, driven by a strong first-half performance in the US and management remaining confident of fully achieving its synergy target from Regal, having identified further opportunities,” Peel Hunt analysts said in a note to clients. The broker also upped Cineworld's price target to 320p from 300p.
The company said its second half had started well with the release of popular franchise films including Mission Impossible: Fallout, Mamma Mia! Here We Go Again and the Incredibles 2 encouraging customers through its doors.
"We are pleased to announce strong first half results following the successful acquisition of the Regal Entertainment Group. Following the completion of the transaction, I have spent a lot a time in the United States getting to know our US business and implementing our strategy,” said Cineworld CEO Mooky Greidinger.
“I am very pleased with the Regal acquisition, we have already identified a significant number of opportunities. We are focused on delivering on the full potential of the combination through the strengths of our brands, focus on customer experience and investment in technology.”
-- Updates share price, adds detail and analyst comment --