Cineworld plunges to £2.2bn loss with cinemas closed in pandemic

Cineworld has revealed it slumped to a record 3.01 billion US dollar (£2.2 billion) loss in 2020 after closing its cinemas during the pandemic, but is hopeful of strong pent-up demand once sites reopen.

The troubled cinema chain swung to the mammoth loss from a pre-tax profit of 212.3 million US dollars (£155.2 million) in 2019 after revenues plummeted by 80% and admissions tumbled from 275 million dollars to 54.4 million.

Shares plunged as much as 14% at one stage as it also warned there were still “material uncertainties” over its ability to continue as a going concern, given the potential for further disruption to its sites and movie releases.

But the group said it is hopeful of a recovery thanks to vaccine progress and “strong pent-up demand” once its cinemas open in the US from April 2, in the UK from May 17, and the rest of the world also in May.

Chief executive Mooky Greidinger told the PA news agency that he wants to “leave 2020 behind” and expects a particularly strong summer.

“I think we will have a mix of new and old films in May, but by summer we should just have a really strong slate of new movies.

“It will be different from when we reopened last year because of the vaccine, that puts us in a much better positions.

“Also, last year the only big release we really had was Tenet and this year, with Bond, the new Top Gun and Matrix films, that will get people fired up again for the cinema experience.”

He added: “I never imagined a time that we would see the closure of our entire cinema estate, nor that varying restrictions would remain in place for so long as we continue to navigate our way through this crisis.”

The group’s 767-cinema estate has been shut for lengthy periods since last March.

But Cineworld said: “Looking forward, the outlook is more positive, with restrictions expected to ease in light of the vaccination programmes under way across our territories.”

The group separately announced moves to boost its battered balance sheet by another 213 million US dollars (£155.8 million) through a bond fundraising.

The shares fall on Thursday comes after the stock has fought back since it warned it was temporarily shutting its UK and US cinemas at the start of October.

Its shares had more than quadrupled since its October low, when the company confirmed its 5,500 UK staff were at risk due to its plan to hibernate sites.

The group revealed a deal earlier this week with Warner Bros to secure the release of the movie giant’s films on Cineworld screens for up to 45 days before they are streamed on the studio’s HBO Max platform.

But Cineworld revealed in its central forecast that it only expects to achieve 60% of 2019 admissions even if it opens all its cinemas as expected in May.

The group said it expects to gradually recover to 95% of 2019 admissions in 2023.

Harry Barnick, senior analyst at Third Bridge, said: “After enduring a year of blank screens and empty theatres Cineworld is keen to emphasise the imminent return of cinema-goers.

“However, our experts say cinemas are unlikely to see 2019 attendance levels until 2023 and point to how Cineworld continues to suffer from its large debt pile.

“The cinema chain will go into cash preservation mode: labour cuts, rent negotiations and postponed refurbishments can all be expected.”