Cineworld celebrates strong reopening weekend as Peter Rabbit 2 pulls in punters

·Contributor
·4-min read

Watch: Peter Rabbit delivers cinemas bounce as UK screens reopen

Cineworld (CINE.L) hailed a better than expected reopening weekend as Brits returned to the big screen after lockdown restrictions were eased for leisure and hospitality venues.

The world’s second largest cinema chain, which closed its cinemas in the UK and the US indefinitely in October 2020, said its performance was boosted by family hit Peter Rabbit 2: The Runaway, as well as people indulging in popcorn which led to strong concession income.

The company said that in the US, the opening of an additional 167 cinemas, meant that more than 97% of sites have now resumed operations. It added that Poland and Israel will be opening at the end of the week, and that most of its cinemas in the rest of the world will be open by the end of the month.

Shares climbed 3.8% in London on the back of the news, valuing the company at £1.2bn ($1.7bn).

Cineworld shares received a boost on Monday on the back of the trading update. Chart: Yahoo Finance
Cineworld shares received a boost on Monday on the back of the trading update. Chart: Yahoo Finance

"We are thrilled to have our cinemas back in business in the US and UK and to welcome movie fans back to the big screen for an exciting and full slate of films,” Mooky Greidinger, chief executive of Cineworld, said.

“With the releases next week of Cruella, and A Quiet Place 2, we expect next weekend's results to be strong. When combined with improving consumer confidence and the success of the vaccination rollout, we expect a good recovery in attendance over the coming months, noting the record breaking success of [Fast & Furious 9] in the Asian market.”

The firm also said it had received the full $203m (£143m) tax refund under the US CARES Act — a $2.2tn COVID support package passed by former president Donald Trump.

Read more: Cineworld hit with shareholder revolt over £208m share scheme

Cineworld, which owns the Picturehouse and Regal chains, has been battling a rising demand for streaming platforms, such as Netflix (NFLX) and Amazon (AMZN) Prime.

Last year, the industry was also rattled by a number of blockbuster film delays, such as Marvel’s Black Widow and the latest James Bond film No Time To Die.

James Corden attends UK premiere of Peter Rabbit in central London, Britain, March 11, 2018. REUTERS/Simon Dawson
Cineworld said its performance was boosted by family hit Peter Rabbit 2: The Runaway, as well as people indulging in popcorn which led to strong concession income. Photo: REUTERS/Simon Dawson

The 25th Bond film was initially due to be released in cinemas in April 2020 but was then pushed back until November. Beverly Hills-based MGM, the Hollywood studio behind James Bond, has now pushed the film back for a third time from April to October 2021.

The film, which cost $250m (£191m) to produce, was forecast to gross more than $1bn worldwide.

Disney’s live-action remake of Mulan also dealt a major blow to Cineworld last year after releasing the film on its streaming service instead of in cinemas.

The film debuted in September at a cost of $29.99 per customer, and only played in theatres in countries that did not have launch plans for Disney+ (DIS).

Read more: Cineworld shares soar as it secures $450m new debt facility lifeline

Due to this, and the impact of coronavirus, Cineworld has been forced to raise almost $1bn in fresh funding to help it avoid collapse after plunging to a $2.7bn loss in 2020. The company also put thousands of Cineworld staff in the UK on furlough.

In March, the cinema chain announced the signing of a multi-year deal with Warner Bros to show newly released films in cinemas for a 45-day exclusive window before they are streamed.

In the UK a deal was signed to give the company a 31-day exclusive window. This will be extended to 45 days for films that open with a pre-agreed box office threshold.

The arrangement will start in 2022.

"Cinema operators have been waiting for this moment for a long time, keeping their fingers crossed that consumers would feel confident enough to return to the big screen. Judging by Cineworld’s trading update, it looks like people have missed the experience and we’ve just had a bumper weekend for cinema visits," Russ Mould, investment director at AJ Bell said.

He added: “The success of the cinema is heavily dependent on the quality of the film slate and there aren’t that many big films lined up for release until later in the summer. This suggests Cineworld will still have to keep its fingers crossed that the past weekend’s trading boost wasn’t a one-off."

Watch: Cineworld marks comeback with Warner Bros deal