UK cinema chain sees profits rise

The UK’s second biggest cinema today said higher admissions and ticket prices had sent box office revenues soaring so far this year.

Cineworld, which has 75 cinemas, posted a 19.1% rise in box office revenues in the 17 weeks to April 23 in a “resilient” performance.

The firm told analysts that average ticket prices had risen at least 7% on last year with admissions around 10% ahead.

Cinemas are traditionally more resistant to recession than other leisure businesses, but potential blockbusters such as 'Star Trek' and its investment in 3D screens left it confident over prospects this year.

As well as 'Star Trek' – the 11th film in the long-running sci-fi franchise which has opened to strong reviews – Cineworld hopes to continue the momentum with forthcoming releases including 'Terminator: Salvation', 'Angels and Demons' and 'Transformers 2' in the pipeline.

Cineworld has also been bolstered by its investment in digital projectors and 3D screens.

By May, 144 of its 774 screens will offer 3D, generating higher admission prices, while Cineworld could also branch into showing live sports or music events.

So far the group has been “very encouraged” by its initial investment in 3D after it claimed 50% and 46% box office share for children’s films 'Monsters versus Aliens' and 'Bolt'.

Retail revenues were also more than 10% ahead although the group faces headwinds from higher utility costs and softening advertising revenues.

It also renegotiated a contract early in 2008 with Carlton Screen Advertising - the business later sold by ITV to a joint venture between Cineworld and rival Odeon – which hit revenues year on year.

However, Cineworld is continuing its expansion and said its 10-screen cinema in Aberdeen, Scotland and a five screen cinema in Witney, England remain on track to open in the second half of this year.

Chief executive Steve Wiener said: “The figures overall demonstrate the resilience of our business in the current economic and financial climate.

“With an attractive line up of film releases in the second half, we remain confident in the outlook for the year as a whole.”

Shares in the business were 2% higher following the trading update.

Evolution Securities analyst James Wheatcroft said: “Concern about advertising spend is genuine but offset by strong box office and retail spend.”

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