- Strong bounce in 2022 admissions, up 70%
- Return to profitability
- Six new cinemas expected to open in 2023
Up-market cinema operator Everyman Media (EMAN:AIM) continued its post-pandemic recovery with admissions and sales in the year to December rising 70% and 61% respectively, pushing the group back into profit.
Despite challenging macroeconomic conditions, the company said it was confident of delivering ‘strong operational and financial progress’ in 2023 driven by an improvement in admissions, cost discipline and new cinema openings.
With the shares down 50% over the last year and earnings expectations considerably lower, investors warmed to the confident outlook and growth ambition, pushing the shares up 1% to 66.2p.
STRONG BOUNCE IN ADMISSIONS
Chief executive Alex Scrimgeour said: ‘We were encouraged by strong growth in admissions in the year, marking a return to business as usual. Everyman remains a popular and affordable choice for consumers, combining great film, hospitality, and atmosphere to provide an exceptional cinema experience.’
Average ticket prices increased 2.6% to £11.29 while spending on food and beverage, a key part of the company’s offering increased 3% to £9.34 driven by price inflation, improved menus and the roll-out of hand-held ordering devices.
Overall, the company maintained its market share at 4.5% and reported an operating profit of £402,000 compared with a £2.2 million operating loss in 2021.
WHAT SHOULD INVESTORS EXPECT IN 2023?
Leisure analyst at Canaccord Genuity Mark Photiades maintained his 2023 forecasts which envisage sales rising 20% to £94.4 million and adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) increasing 18% to £17.2 million.
Photiades sees growth in sales and adjusted EBITDA of 21% and 19% a year over the next three years. ‘The film slate for FY23 and beyond is strong and varied, with a marked increase in wide releases expected.
‘Commitment to the theatrical window from distributors and significant planned investment from streamers into cinema content is a major industry endorsement.’
OTHER EXPERT VIEWS
Investment director at AJ Bell Russ Mould commented: ‘Posh cinema operator Everyman Media has a tricky path to navigate through the cost-of-living crisis.
‘The company’s model is also reliant on people taking advantage of the opportunity to order food and drink to their seats. If people decide they can’t afford to do anything other than rock up and watch the film that could weigh heavily on profit.
‘For now, the business appears to be doing a decent job by announcing a big jump in admissions in 2022 versus 2021, partly explained by the emergence from the pandemic, and a return to profit.
‘And in a sign of its confidence the company is set to continue with the rollout of new venues.’
Disclaimer: Financial services company AJ Bell owns Shares magazine. The author of the article (Martin Gamble) and the editor of the article (Ian Conway) own shares in AJ Bell.
