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Cineworld reports weak start to financial year

The cinema operator remains more optimistic about film releases in the second half
Cineworld reports weak start to financial year

Cineworld (CINE) had a weak start to the 2019 financial year, as the cinema operator had previously warned. Admissions fell 14.4 per cent to 136m, while box-office sales were down 14.9 per cent to $1.29bn (£1.06bn). This contributed to an 11.1 per cent drop in group sales to $2.15bn on a pro-forma basis, as if Regal entertainment had been consolidated for the entirety of the comparative period, rather than four months of it. The continued integration of Regal is going to plan, with $150m of synergies expected to be achieved.

IC TIP: Hold at 237.8p

The group also made progress in changing its capital structure. Two sale and leaseback transactions were completed during the period across 35 US-based sites for a total of $556m, allowing Cineworld to repay $550m on a US-dollar denominated term loan. A 20.27¢ special dividend was also paid in early July, post-period end.

Analysts at Peel Hunt expect adjusted pre-tax profits of $517m during 2019, giving EPS of 31.3¢, increasing to $542m and 32.7¢, respectively, in 2020.

CINEWORLD (CINE)   
ORD PRICE:237.8pMARKET VALUE:£3.26bn
TOUCH:237.7-238.2p12-MONTH HIGH:307pLOW: 232p
DIVIDEND YIELD:6.1%PE RATIO:15
NET ASSET VALUE:243¢*NET DEBT:200%**
Half-year to 30 JunTurnover ($bn)Pre-tax profit ($m)Earnings per share (¢)Dividend per share (¢)
20181.8616011.14.85
2019***2.151408.67.50
% change+15-13-23+55
Ex-div:12 Sep   
Payment:4 Oct   
*Includes intangible assets of $6.01bn, or 438¢ a share **Does not include lease liabilities of $352m ***Does not include a special dividend of 20.27¢, paid on 5 July 2019 £1=$1.22