Cinema chains boost bottom lines
Despite a relatively flat box-office, Village Cinemas and Event Cinemas posted impressive gains in profits in the financial year ending June 30.
The Village circuit in Australia boosted pre-tax earnings by 14.4% to $58.5 million on revenues of $255 million, according to Village Roadshow Limited’s annual results.
Amalgamated Holdings Limited (AHL), which owns Event Cinemas, Birch, Carroll & Coyle and Greater Union, reported its Australian cinema interests lifted pre-tax earnings by 11.5% to $60.1 million on sales of $403.6 million. The two companies are partnered in Australian Theatres, which owns and operates a number of multiplexes.
“Our cinema statistics show that Australian box-office revenue was relatively flat for FY13, making the result across the Village and Amalgamated circuit all the more impressive,” said Ord Minnett analyst Nicholas McGarrigle.
Village said it will continue to expand the Vmax and Gold Class footprint in Australia, with 18 new Gold Class and 8 new Vmax screens under construction.
However VRL’s film distribution division saw pre-tax earnings fall by 9% to $46.2 million on revenues of $339.3 million. The company blamed the lower result on the renegotiation of its pay-TV contract with Foxtel, the sale of the Prestons distribution centre and the cycling of Red Dog, which was a high margin film for Roadshow. In home entertainment, the growth in the digital sales was roughly in line with the decline in DVD revenues, it said.
Ord Minnett noted there has been a soft start to the 2014 fiscal year at the box-office, estimating revenues through August 21 are down 10%-13% year-on-year.
The broker said, “We are optimistic about the upcoming releases of the second instalment of Thor, The Hunger Games, Anchorman and The Hobbit, but prefer to cut our exhibition revenue growth forecasts from 2.5% in FY14 to 1%.”
Company-wide, including hotels and Thredbo, AHL generated a normalised net profit of $84.2 million. VRL produced a normalised net profit of $57.2 million.