A weak film slate hit Cineworld’s (CINE) profit in the six months to 30 June.
The cinema chain is trading 1.1% lower at 587p.
Cineworld says operating profit fell to £41.8 million, down from £43.8 million over the same period in 2015 due to an impairment charge of £700,000 million and higher reorganisation costs of £1 million.
Pre-tax profit has declined by over a third to £30.6 million, which the company blamed on a change in admission levels year-on-year in the UK due to a weaker film slate.
Cineworld says the Euro 2016 championships pushed back the release of big movies such as the BFG from June to July to counteract lower audience numbers.
Total UK box offices admissions for the first half of the year was 4.9% lower compared to the same period last year.
However, the UK market box office is up 21.7% between 1 July and 7 August this year, compared to last year.
Revenue has increased by 6.8% to £356.7 million, driven by more admissions and higher average ticket prices to reflect more availability and popularity of the cinema’s premium offerings.
N+1 Singer is positive about the results as it reinforced the defensive growth attributes of the group and says UK admissions outperformed the market by 1% and total sales are up 3%.
The broker says the rest of the world business is the main star of the interims, with first half sales up 13%. This includes Poland, Israel, Romania, Hungary, Czech Republic, Bulgaria and Slovakia.
Due to its low ticket nature and consumer appeal, Cineworld does not believe that the EU referendum result will have a significant impact on its underlying performance.
As we quoted in our recent recession-linked cover article, according to figures from the UK Cinema Association, the annual UK box office increased during the financial crisis. Up 7.7%, 4.1% and 11% in 2007, 2008 and 2009 respectively.
The company also says its acquisition of five cinemas from Empire Cinemas on 28 July will enhance its footprint in London.
