Cineworld profits surge following Regal acquisition

Profits at Cineworld surged in 2018 as the company reaped the benefits of its Regal Entertainment acquisition.

In the year to 31 December 2018, pre-tax profit rose 125% to $349m on revenue of $4.12bn, up 259%. Adjusted pre-tax profit was up 150.5% to $417m and admissions grew 162.6% to 272.6 million.

Cineworld said the integration of US-based Regal, which was bought last year, is progressing well, with integration benefits greater than expected and being delivered at a faster pace. The company now expects run-rate synergies of $150m in 2019 versus a previous forecast of $100m.

The group lifted its full-year dividend by 17.6% to 15 cents.

Chief executive Mooky Greidinger said: "We are pleased to announce strong full year results following the successful acquisition of Regal. We are well on our way to achieving the successful business integration following a strong performance and record box office results in the US.

"The combination with Regal has exceeded our expectations - we have incorporated the best of both companies by bringing together world-class talent, integrating best practice from both sides of the Atlantic and deepened our understanding of the US market. Whilst the group has expanded significantly, our strategy and vision remain the same, to be 'The Best Place to Watch a Movie' by continually focusing on providing the best customer experience, maintaining technological leadership, expanding and upgrading the estate, and training and retaining highly motivated, experienced and loyal staff."

Greidinger highlighted the "strong" film slate for the remainder of the year, which includes Captain Marvel, Dumbo, and Frozen 2.

At 0935 GMT, the shares were up 6.6% at 307.80p.

Fiona Cincotta, senior market analyst at City Index, said "These numbers from Cineworld make for great viewing. The Regal deal, once panned as too expensive, has provided a big US-based profit boost, just as sales were wilting in the UK.

"Impressive profit growth aside, the size of the company's debt pile will linger in investors minds' as a cause for concern.

"By hiking the dividend, management is clearly confident that Cineworld can keep churning out sufficient profit growth to meet its financing costs, cut debt and continue rewarding investors with more payouts.

"Continued investments in cinema refurbishments should help the company hold its own against competition from quality television productions. But the big test for Cineworld will come when we have a year, or years, of dud film releases."