Key points:
- Cineworld shares tarded sideways after releasing its half-year results.
- Investors were expecting the results, hence, the muted reaction.
- Can Cineworld shares recover? Read on to find out.
The Cineworld Group plc (LON: CINE) share price traded sideways after releasing its half-year results. The world’s second-largest cinema operator noted that easing COVID-19 restrictions in Q1 2022 boosted its performance.
The company’s revenues rose to $1.51 billion compared to last year’s $130.6 million, while its gross profits surged to $424.5 million, far outpacing last year’s $9.6 million figure. In addition, the firm registered an operating profit of $57.3 million compared to last year’s operating loss of $208.9 million.
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However, despite the upbeat revenues and improved gross profits, Cineworld still burned through $144.9 million during the six months compared to $271 million during H1 2021. The slower-than-expected recovery drove the company’s cash burn during the period.
Cineworld’s total debt obligations rose to $5.2 billion, an increase from the $5 billion debt on record on 31 December 2021. The company reduced the amount of external borrowing but suffered a decrease in cash and cash equivalents, leading to higher debt.
Investors barely reacted to the news that the cinema operator had slashed its short and medium-term forecasts for cinema admissions due to the slow recovery experienced and the lack of a constant stream of blockbuster releases to make people visit their cinemas.
Cineworld also informed investors that it was making solid progress in its voluntary Chapter 11 bankruptcy hearing after the judge granted it access to $785 million of an approximate $1.94 billion debtor-in-possession financing facility.
The firm noted that the financing facility would help it meet its short-term obligations as it works with its secured lenders to emerge from the bankruptcy process with a stronger balance sheet, greater financial strength and the flexibility to keep purring its strategy in the markets.
Cineworld noted that it had appealed the C$1 billion award to Cineplex by a Canadian court and did not expect to incur any liability from the case. Hence, it had no financial provisions in the current financial period.
Cineworld shares have fallen 90.4% this year but appear to have formed a bottom at current prices. Can CINE shares recover? Yes, they can, but that could take a long time, maybe even years.
*This is not investment advice.
Cineworld share price.
The Cineworld share price traded sideways after releasing the financial results for the first half of 2022.