As delayed movies threaten to bite the movie industry, the world’s second largest cinema chain warns of further problems.
As big movies continue to flee their incoming release dates in response to the spread of Coronavirus, a warning now comes from one of the biggest cinema operators in the UK.
Cineworld, which is the second largest cinema chain in the world and one of the biggest in the UK, has issued a warning that a worst case scenario could see it lose three months of income due to the impact of Covid-19.
Were that to happen, it would “indicate the existence of a material uncertainty which may cast significant doubt about the group’s ability to continue as a going concern”, it said in a statement.
Having issued said warning, though, it also goes on to mitigate that.
Cineworld, which also owns Picturehouse in the UK, is in the midst of trying to finalise a deal to purchase Canadian chain Cineplex. It’s, as is the modern way, funding the purchase through loans, and that will see it with several billion dollars’ worth of debt. All manageable debt, as in a report at the Financial Times, the firm’s chief executive declared “we are not worried”. He cited the fact that most of the company’s costs were variable, noting “if we don’t sell movies, we don’t pay for the movies. If we don’t see Pepsi, we don’t pay for the Pepsi”.
He added too that “a lot of our temporary manpower, if we don’t invite them to work if the cinemas are closed, we are also not paying them”. Which is nice.
Cineworld made pre-tax profits of $212m in 2019, down on 2018. Like many, it’s watching with interest and caution as to just where the next few months take us.
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