Cineworld Group plc (LON:CINE) flicked higher on Thursday after the UK cinema chain posted a sharp rise in profits thanks to a series of big-name releases during the first half of the year.
Guardians of the Galaxy 2, The Fate of the Furious and Beauty and the Beast were just three of the blockbusters which helped to draw in customers in the opening six months of 2017.
Screen makeovers paying off
The FTSE 250-listed cinema operator has also been busy refurbishing a number of its sites with bigger screens and better sounds, which it said also boosted performance.
For the half-year to 30 June, Cineworld pre-tax profits soared by almost 58% to £48.2mln (H1 2016: £30.6mln) on higher revenues, which jumped 12.4% on a constant currency basis to £420mln (H1 2016: 356.7mln).
Total admissions rose 10% to 50.7mln, leaving Cineworld on track to beat the record 100.3mln customer visits it set last year.
Visitor numbers were helped by the acquisition of the 16-screen Empire cinema in Newcastle, as well as the opening of two new sites – one in the UK and one in Israel.
Bright outlook with Star Wars and other blockbusters to come
Cineworld said the outlook for the second half looked good as well, with a good slate of films – including Dunkirk and Star Wars: Episode VIII – and 11 new site openings expected to draw in customers.
“We are very pleased to report our results for the first half of 2017 - showing strong growth in admissions, revenues, EBITDA and profit,” said chief executive Mooky Greidinger.
“We have continued opening new sites as well as refurbishing our top cinemas around the estate and taking great consideration to create better sightlines, bigger screens, better sound and great comfort around the halls in the public areas.
“These cinemas are being embraced by our customers and give a clear message that we believe in the theatrical experience and expect our customers to come to the cinemas again and again.”
He added: “Based on the film slate in the second half and our first half results, we remain confident of delivering a performance for the year as a whole in line with current market expectations.”
Better-than expected numbers, but valuation a concern for Numis
Current trading and film slate expectations means management remain comfortable with FY consensus,” said Numis analyst Richard Stuber.
“We are highly supportive of its business model, particularly its geographic diversification (UK 60%/ RoW 40% of group revenue and nearer 50/50 at EBITDA level) and structural rollout story.”
Stuber kept his recommendation at ‘hold’ though, citing concerns that the stock looks overvalued compared to its peers.
Shares added 2.7% to 724.5p late on Thursday morning.
--Updates for broker comment and share price--