12th Mar 2015 13:06
LONDON (Alliance News) - Cineworld Group PLC hiked its dividend by more than 30% on Thursday after the company said its pretax profit in 2014 more than doubled on the back of higher revenue driven by the merger with Cinema City Holding BV and said its prospects for 2015 look good on the back of a strong slate of upcoming releases.
Cineworld said its pretax profit for the 53 weeks to January 1, 2015 was GBP67.3 million, compared to GBP30.9 million in the 52 weeks to December 26, 2013. Group revenue increased 53% to GBP619.4 million in the period from GBP406.1 million.
Revenue was boosted substantially by its merger with Polish cinema operator Cinema City Holding BV, with revenue on a pro-forma basis rising 1.7%.
On the back of the results, the company said it would pay a final dividend of 9.7 pence per share, bringing its total dividend to 13.5 pence against 10.1 pence a year earlier, a 34% hike.
"We are pleased to announce solid results for the year and strong cash generation following the successful combination of Cineworld and Cinema City. The combination has resulted in the creation of the second-largest cinema chain in Europe, with 203 sites and 1,875 screens by the end of 2014. As a group, we have outperformed the market and continued to grow revenues despite a year which saw a decline in global admissions," said Mooky Greidinger, Cineworld's chief executive officer.
Cineworld shares were up 5.7% to 473.8 pence Thursday afternoon, one of the best performers in the FTSE 250. Shares are up 14% in the year to date and up 48% in the past 52 weeks.
Cineworld said it saw 82.9 million admissions in 2014, compared to 51.5 million in 2013, with its box office take increasing to GBP399.2 million from GBP279.9 million. Admissions in the UK & Ireland fell to 47.9 million from 48.4 million, but revenue increased to GBP385.6 million from GBP369.5 million. Box office revenue in the UK & Ireland rose to GBP269.3 million from GBP261.5 million, though this was flat on a 52 week-versus-52 week basis.
The increased revenue resulted from a 4% rise in the average ticket price, driven in part by an inflationary price rise in the year but also reflective of the film mix in the year. Cineworld said it saw a higher proportion of adult admissions and was benefited from its strategy of expanding to an IMAX large-screen offering and from the popularity of 3D movies, both of which command higher ticket prices.
It said the overall box office performance in the UK & Ireland was impacted by a weaker film slate in the year and also by the football World Cup in the summer. The three top-grossing films in 2014 grossed a total of GBP100.4 million, compared to GBP125.1 million for the highest-grossing trio in 2013.
The group also saw a rise in retail revenue in the year in the UK & Ireland, up to GBP89.3 million from GBP84.6 million as the net retail spend per person increased to GBP1.86 from GBP1.75.
Revenue in its Picturehouse chain, which operates sites offering smaller and fewer screens than the Cineworld multiplex brand, saw revenue increase to GBP39.7 million from GBP36.6 million, boosted by a rise in admissions to 3.2 million from 3.1 million. The figures for Picturehouse were nudged higher by a good Christmas trading week, the company added, with admissions actually falling 0.3% on a 52-week comparison.
In Central & Eastern Europe and Israel, where the Cinema City brand operates, admissions increased to 39.8 million from 37.0 million on a pro-forma basis. Box office and retail revenue both rose, but distribution revenue from the Forum Film business fell due to a weaker first half.
Cineworld said its outlook for 2015 looks positive, with Greidinger saying the slate looks "strong" at present. The year will see the release of the fourth movie in The Hunger Games series, the new James Bond film, and a new Star Wars film, all of which are expected to perform well at the box office.
Greidinger added that Fifty Shades of Grey, which opened in February, has performed beyond its expectations and said the start of 2015 has proved positive, with record levels of weekend admissions in the year so far.
Cineworld is contracted to open a further 10 cinemas in the UK and 10 in Central and Eastern Europe and Israel this year, with 19 of these under construction.
Analysts were positive on the results, agreeing with Cineworld that 2015 looks set to be a strong year.
Numis upgraded Cineworld to Add from Hold and retained a 500 pence price target.
The broker hiked its 2015 forecasts by 4% based on box office and retail growth assumptions and from its planned cinema estate expansion in the UK and Europe. "We forecast double-digit earnings growth in both 2015 and 2016, and believe there is further upside risk to forecasts," says analyst Douglas Jack.
Investec raised its price target to 490 pence from 450 pence, saying Cineworld has seen strong profit growth in a weak film industry year.
The broker retains a positive outlook on the chain, saying it has strong underlying momentum going into a big film year. It also reiterated its Buy rating on the stock.
By Sam Unsted; [email protected]; @SamUAtAlliance
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