Hopes of a recovery in its fourth quarter helped drive Cineworld (CINE) 5.3% higher to 64.5p. The company’s first half results bore the scars of lockdown. The company also eyed a listing of its US operations to help fix its strained finances.
Revenue plummeted 59% in the six months to 30 June, from $712.4 million in the first half of 2020 to $292.8 million, as Covid 19 lockdowns at the start of the year resulted in the closure of almost 800 of its sites.
Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) was down 140% to a loss of $21.2 million from a profit of $53 million last year, with an adjusted loss after tax of $581.8 million.
During the period, the company increased its borrowing to $4.6 billion (excluding cash), an increase of $80.9 million since the end of 2020. In July, Cineworld raised an additional loan of $200 million. Its significant borrowings are a legacy of its debt-funded acquisition of US cinema chain Regal in 2018.
CEO Mooky Greidinger said: ‘Despite the challenges, the actions we have taken have ensured that Cineworld has emerged a more focused business with significant liquidity and a clear vision for the future.
‘Trading has been encouraging since we started to re-open our sites in April and it has been great to have our teams back, doing what they do best, and welcoming customers back into our cinemas.’
The company pointed to strong film slate underpinning its hopes for the final three months of the year.
AJ Bell financial analyst Danni Hewson commented: ‘Cineworld is predicting a strong recovery in its fourth quarter, having seen a gradual return of audiences since Covid rules were relaxed or removed in its core UK and US markets in late July.
‘However, the company is still burdened with an extremely large debt pile and it will be hoping that the crisis it has endured over the past 18 months doesn’t have a sequel.’