Cineworld has warned further global coronavirus restrictions or film delays may force it to raise further cash as it revealed half-year losses of 1.6 billion US dollars (€1.4 billion).
The group swung to the hefty loss for the six months to June 30th from pre-tax profits of 139.7 million US dollars a year ago as revenues plummeted after lockdowns forced its cinemas to close. It said it was still in talks with lenders over breathing space for upcoming banking agreements, while it alerted over the potential need to boost finances again if it had to close its cinemas once more or if film releases were pushed back.
But it said current trading has been “encouraging considering the circumstances”, with solid demand for action-thriller and spy film Tenet released earlier this month.
There remains a significant difference between watching a movie in a cinema – with high-quality screens and best-in-class sounds – to watching it at home
Cineworld warned: “There can be no certainty as to the future impact of Covid-19 on the group.
“If governments were to strengthen restrictions on social gathering, which may therefore oblige us to close our estate again or further push back movie releases, it would have a negative impact on our financial performance and likely require the need to raise additional liquidity.”Reopenings
The group said 561 of its 778 sites worldwide have reopened, with 200 cinemas in the US, six in the UK and 11 in Israel still closed.Cineworld said if the cinemas still closed in the US do not open before the end of October or there are further delays in the forecast significant movie releases to 2021, then extra financing would be needed.
In a “severe but plausible scenario” where a second wave of the pandemic caused further lengthy cinemas closures, then it would breach banking agreements in December and June 2021 and need further financing to continue to operate from early next year, it said.
Cineworld has already raised an extra 360.8 million US dollars to help it weather the crisis so far. Chief executive Mooky Greidinger said: “Despite the difficult events of the last few months, we have been delighted by the return of global audiences to our cinemas toward the end of the first half, as well as by the positive customer feedback we have received from those that have waited patiently to see a movie on the big screen again.”
He added: “Current trading has been encouraging considering the circumstances, further underpinning our belief that there remains a significant difference between watching a movie in a cinema – with high-quality screens and best-in-class sounds – to watching it at home.”
In May, Cineworld pulled out of a 28 billion Canadian dollar (€1.7 billion) deal to buy Canada’s biggest chain Cineplex, which would have created the biggest chain of cinemas in North America.READ MORE70 new jobs in firm involved with National Broadband Plan roll-out