Cineworld Group PLC (LSE:CINE) said cinema admissions were below expectations in the third quarter of the year and forecast that admissions will remain below pre-pandemic levels in the next two years.
The struggling British cinema chain, which earlier this month filed for Chapter 11 bankruptcy protection in the US, reported below-pandemic and lower-than-expected profits and sales in the first half, although they were significantly ahead of the lockdown-hit 2021.
The giant cinema operator’s gross profit rose to US$424.5mln in the six months to 30 June 2022 compared with US$9.6mln for the same period the year before, while revenue grew to US$1.5bn from US$292.8mln, reflecting the uninterrupted operation of its 747 global sites.
Covid-19 materially has impacted all aspects of the company's operation since the first quarter of 2020 and while monthly admission levels progressively recovered in the first half of 2022 they remained below both pre-pandemic levels and its original forecast, Cineworld said in a statement Friday.
"Despite the gradual easing of Covid-19 restrictions and the group's improved performance, particularly over the second quarter of the half-year period, the lingering impact of the Covid-19 pandemic contributed to us continuing to face pressures, particularly in relation to our balance sheet and liquidity position,” Alicja Kornasiewicz, Cineworld chair, commented.
It reviewed and revised down its short and medium-term cinema admission forecasts on the slower-than-expected recovery being experienced this year combined with external forecasts indicating a lower volume of theatrical releases in 2023 and 2024.
Although third-quarter admissions look to be below expectations, the fourth quarter is anticipated to be stronger, supported by the scheduled release of Black Adam, Black Panther: Wakanda Forever, Avatar: The Way of Water and other blockbuster films.
In response to this slower-than-expected recovery, Cineworld earlier this month started voluntary cases under title 11 of the United States Code.
As part of this, it will seek to implement a de-leveraging transaction that will significantly reduce the company’s debt, strengthen its balance sheet and provide the financial strength and flexibility to accelerate, strategy in the cinema industry.
As part of the ‘first day’ hearing in the Chapter 11 cases on 9 September, the court granted it immediate access to US$785mln of a roughly US$1.94bn debtor-in-possession financing facility.