The reopening of the UK economy has not had the positive effect on the Cineworld share price that you would expect with the restrictions being lifted in recent months.
Shares almost halved from their March highs when the company reported an X-rated $ 2.6 billion loss, more than half of which was due to write-downs of $ 1.34 billion. In July, Cineworld’s share price hit its lowest level this year, with investors increasingly skeptical of its outlook.
Unlike its US counterpart, AMC Entertainment, which reported earlier this week, Cineworld does not have the Reddit team watching its back, as its finances remain in an equally precarious state, and the stop-start nature of its reopening in the UK didn’t help, although its US operations should have done better if AMC’s numbers were any guide.
It also means the bar has been set low for today’s first half numbers which helps explain today’s stock price rebound, however the numbers are still austere.
Expectations for 2021 revenue in March were in the order of $ 2.5 billion and in excess of $ 4 billion in 2022.
Today’s first half numbers made a giant hole in those projections, with first half revenue rising to $ 292.8 million, well below the same period a year ago of 712, $ 4 million. Admissions fell to 14.1 million, from 47.5 million, a reduction of 70.3% from the same period last year, which saw the channel face similar restrictions on its operations, although over a shorter period.
On a more positive note, the first half after-tax loss improved to $ 576.4 million, however, it was compared to last year’s terrible benchmark of a loss of $ 1.645 billion.
Cash consumption averaged around $ 45 million per month, although this was improved due to a $ 204.4 million tax receipt under the U.S. CARES Act.
Given these numbers, Cineworld is certainly hoping for a more solid second half as well as a solid film release list, which will include the new James Bond and Top Gun films and help push its annual revenue to the $ 2 billion mark. benchmark analyst estimates.
The company made time for itself with various plans to restructure its finances and raise additional funds last November when management succeeded in securing the additional cash it needed to secure a stay of execution, agreeing to loan loans. waivers until June 2022 and obtaining a new credit facility of $ 450 million, maturing on May 23, 2024.
The company also announced in late July an additional $ 200 million in additional loans maturing in May 2024, from a group of its existing lenders, but this is unlikely to be enough.
Perhaps this is why management made the decision to explore a listing in the US, as well as the option of listing its Regal operations in the US to further consolidate its finances.
This is a remarkable turnaround given that only three years ago they bought Regal, but it also highlights the precarious state of the company’s finances, and there may be a Little hope that they can benefit from the AMC effect, which has seen their shares of their cinema counterparts soar.
It also doesn’t change the fact that its debt at the end of 2020 was a touching distance of $ 8 billion.