Spider Man drives audiences to Cineworld
Cineworld said box office and concession revenues were “particularly strong” in December – at 88% of 2019’s pre-Covid level – driven by the success of Spider-Man: No Way Home as it became the first film to gross more than $1.5bn since the onset of the pandemic.
In a trading update the cinema operator said it had generated positive cash flow in the fourth quarter of 2021 thanks to steady growth in performances and attendances over the period.
The company is also likely to benefit from torthcoming releases of a rebooted Top Gun film and the latest Jurassic World adventure.
Russ Mould, investment director at AJ Bell, said turning cash flow positive was the precious nugget in the latest update.
“Given the cinema operator’s precarious financial position it literally cannot afford to have more cash going out the door every month than it is taking in through sales of confectionary, drinks, snacks and film tickets,” he said.
“Cineworld has a symbiotic relationship with Hollywood, and this was severely strained during the pandemic as some film studios opted to release titles on their own streaming platforms, rather than wait for the restrictions keeping cinema’s curtains closed to be drawn away.
“However, Cineworld faces its own unique challenges due to the way it was run pre-Covid, over-stretching finances to complete the big US takeover of Regal Entertainment and then getting buyer’s remorse and walking away from another deal to buy Canada’s Cineplex.
“Ordered to pay the best part of a $1 billion in damages for abandoning the deal is a drain on Cineworld’s resources.
“The danger is that this leaves Cineworld short of funds to invest in its cinema estate, meaning its theatres start to look less attractive to cinema-goers than rivals – particularly with Odeon and Vue upgrading many of their cinemas to have plenty of comfortable reclining seats.”