Cineworld swings to huge loss after virus closures

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Empty cinema auditoriumImage source, Getty Images

Cineworld has warned it may need to raise more money in the event of further coronavirus restrictions or film delays due to Covid-19.

It swung to a $1.6bn (£1.3bn) loss for the six months to June as its cinemas were closed under lockdown.

"There can be no certainty as to the future impact of Covid-19 on the group," it said.

The cinema giant said it had reopened 561 out of 778 sites worldwide as lockdown restrictions have eased.

Six of its theatres in the UK remain closed after cinemas were forced to shut temporarily for several months from mid-March in an attempt to contain the spread of Covid-19.

The lockdown closures meant group revenues sank to $712.4m in the first six months of the year, compared with $2.15bn a year earlier.

The group loss this year also marks a huge fall from the pre-tax profits of $139.7m seen in the first six months of 2019.

Cineworld said it was still in talks with lenders to negotiate waivers on banking agreements, which fall due in December and in June next year.

The company warned that it might have to take action if current measures aimed at preventing the spread of coronavirus were tightened.

"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."

Independent London cinema Peckhamplex recently announced it was being forced to close its doors temporarily due to falling visitor numbers and delayed releases.

In an email to regular visitors, it said that "the film distributors that we rent our films from are constantly re-scheduling the big titles to further and further away".

Under current plans, the cinema will close on 25 September and hopes to reopen in November, around the time the next James Bond film is due to be released.

Return to the big screen

But Cineworld said recent trading had been "encouraging considering the circumstances", with solid demand for Christopher Nolan's spy film Tenet released earlier in September.

Image source, Getty Images

"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," said chief executive Mooky Greidinger.

"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."

Cineworld's share price fell by more than 13% on Thursday after the publication of its half-year results.

"Today's first half-year numbers serve to highlight the scale of the mountain that needs to be scaled by the sector as a whole," said Michael Hewson, senior analyst at CMC Markets.

He added that they "certainly back up" Cineworld's decision in June to pull out of a $2.1bn deal to buy the Canadian cinema chain Cineplex.

The two firms now face a legal battle after Cineplex announced it would sue Cineworld for $1.1bn in damages. Cineworld said on Thursday it had filed a counterclaim against the Canadian group for alleged "losses suffered as a result of Cineplex's breaches" of their agreement, as well as lost financing costs and advisory fees.