Cineworld shares sink in wake of £1.3bn loss
Cineworld warned that it may need to shore up its finances after plunging to a massive half-year loss.
The FTSE 250 company reported a $1.6bn (£1.3bn) pre-tax loss for the six months to June after being forced to shut most of its theatres from mid-March to August due to the pandemic. It made a profit of $139.7m for the same period last year.
Revenues plunged by two thirds to $712m after ticket sales plunged from 136m to 45m.
The world's second-largest cinema chain said uncertainties around a second wave of Covid, leading to a prolonged recovery for the industry, meant that the future of the company could be at risk.
Shares plunged 15pc before regaining some ground to 43p, valuing the company at just under £600m. The stock was worth 220p at the beginning of the year.
Cineworld said lack of clarity about the cinema industry's recovery represented uncertainties about the group's ability to continue as a going concern".
Under a "severe but plausible downside scenario", the company said it would need additional financial facilities to continue operating from early 2021.
However, it expected lenders to grant necessary waivers on its loans.
Cineworld has reopened almost three-quarters of its 778 sites, but 200 in the US remain closed.
The pandemic has hit the leisure industry particularly hard as social distancing restrictions mean large crowds are unable to gather in settings such as cinemas and theatres.
Cineworld has had a torrid few months, in which it walked away from plans to snap up Canadian rival Cineplex for $1.6bn, citing virus-related concerns. The pair are now suing each other.
It has also faced legal action over unpaid rent.
Chief executive Mooky Greidinger said: "The impact of Covid-19 on our business and the wider leisure industry has been substantial, with the closures of all of our cinemas worldwide for an extended period.
"Current trading has been encouraging considering the circumstances, further underpinning our belief that there remains a significant difference between watching a movie in a cinema – with high quality screens and best-in-class sounds – to watching it at home."
Analysts at Peel Hunt said: "[Cineworld] is clearly severely impacted by Covid-19 and went into the current situation with a material debt burden. [But] if it can keep going without raising additional equity capital until the cinema market returns to something more like normal, there is considerable upside for shareholders."
Cineworld had net debt of £8.2bn at the end of June.
