Cineworld could be left unable to pay debts in worst-case coronavirus scenario
12 March 2020, 09:24
While it has so far seen ‘minimal impact’ from the outbreak, in an extreme and “unlikely” situation it could lose up to three months of revenues.
Cineworld has said the spread of Covid-19 could make it unable to pay its debts in a worst-case scenario.
It said that while it has so far seen “minimal impact” from the outbreak, in an extreme and “unlikely” situation it could lose up to three months of revenues.
The company saw its share price plunge further on Thursday morning, after slipping in recent weeks amid fears the virus would see customers shun cinemas or result in closures.
Mooky Greidinger, chief executive officer of Cineworld Group, said that if the situation worsens, the firm could postpone capital expenditure or reduce costs in order to reduce the impact.
The cinema chain has been put under pressure by the postponement of major cinema releases such as the new James Bond movie, which had been moved back to November.
Nevertheless, Cineworld said it is “excited for upcoming films in 2020” such as Black Widow, Wonder Woman 1984, and Top Gun Maverick.
The update came as Cineworld reported a decline in profits in 2019 despite a rise in revenues and admissions.
The cinema chain saw statutory pre-tax profits fall 39.1% to 212.3 million US dollars (£165.6 million) on the back of higher one-off costs.
Sales increased by 6.1% to 4.37 billion dollars (£3.4 billion) after admissions rose to 275 million for the year, from 272.6 million in 2018.
Mr Greidinger said: “Cineworld has delivered a solid set of full-year 2019 results despite 2018 being a very strong comparative period.
“We are closely monitoring the evolution of Covid-19 and, so far, we have seen minimal impact on our business.
“However, there can be no certainty on its future impact on our activities, hence we are taking measures to ensure that we are prepared for all possible eventualities.”
Shares in the company fell 31.8% to 60.2p in early trading on Thursday.