TORONTO — The owner of Canada’s largest chain of movie theatres says its strategic diversification into multiple forms of entertainment helped drive the company’s second-quarter revenue to a record high $439.2 million.
In the main theatre business, Cineplex Inc. said a 1.7 per cent decline in attendance from last year was offset by higher box office revenue per patron and higher concession revenue per patron.
Secondary businesses — including advertising sales and alternative forms of entertainment — helped push up total revenue by $30 million or 7.3 per cent from $409.1 million in last year’s second quarter.
Cineplex says its media increased 21.5 per cent or $8.8 million to a second quarter record of $49.6 million due to the growth in both in-theatre advertising and out-of-theatre digital signage.
Revenue from its amusement solutions business, which supplies equipment to third party arcades, bowling alleys and amusement parks, was up 16.8 per cent or $7 million to $48.4 million.
The Rec Room group of leisure locations grew revenue by 33.4 per cent or $5.2 million to $20.9 million.
However, net income was down compared with last year, a decline that Cineplex chief executive Ellis Jacob attributed largely to a couple of unusual circumstances.
For one thing, “Avengers: Endgame” — one of the biggest box office draws in history — added to expenses at its theatre business because it was three hours long.
“So to make up the revenue, you had to extend the hours . . . and you end up with higher labour costs,” Jacob said.
In addition, he said, last year’s profit included an unusual insurance payment received in the second quarter.
As a result, Cineplex’s 2019 second quarter net income fell to $19.4 million, or 31 cents per share, from $24.4 million, or 38 cents per share, in the comparable period last year.
Analysts had estimated $429.08 million of revenue and $15.35 million or 24 cents of net income, according to financial markets data firm Refinitiv.
Cineplex shares gained about six per cent to $24.41 in afternoon trading, but remained at the low end of a 52-week range between $22.34 and $36.65.
Companies in this story: (TSX:CGX)
David Paddon, The Canadian Press