Cineplex says success of Hollywood movies stateside didn't translate to Canada
TORONTO - Nasty winter weather and a slate of movies that didn't appeal to Canadian audiences left Cineplex Inc. (TSX:CGX) profits falling 42.5 per cent in the first quarter.
Chief executive Ellis Jacob said that while several films struck box-office gold in the United States, their niche-market appeal didn't translate to Canada.
On that list was the Mark Wahlberg movie "Lone Survivor," about the war in Afghanistan, the Kevin Hart comedy "Ride Along" and the faith-based drama "Son of God," all of which delivered below expectations in Canada.
Making matters worse were bad weather conditions in the quarter that cause power outages that forced theatres to close.
"The weather â€” especially in the Atlantic provinces â€” we really got hit with that," Jacob said in an interview.
"Their box-office was down quite significantly."
Overall, net profits were $5.1 million or eights cents per share for the three months ended March 31. That compared with $8.8 million or 14 cents per share in the comparable period last year.
However, revenues increased 12.9 per cent to $280 million, mainly due to the acquisition of 24 Empire theatres and digital media company EK3 Technologies Inc. in 2013.
The theatre chain says its box-office revenue was up 7.6 per cent to $156.2 million, compared with $145.2 million year-over-year.
Attendance also got a boost from the Empire theatres, rising 6.7 per cent, though same-theatre attendance dropped 2.7 per cent.
Despite more empty seats, Cineplex said it will increase its dividend by 4.2 per cent to $1.50 per share annually.
At the concession stand, revenue increased 14.8 per cent to $11.3 million, with an average of $5.05 being spent per person.
Winter weather conditions also left a mark on Cineplex's advertising division, Jacob said.
Overall, the media division revenue improve 49 per cent to $24.4 million, mostly due to the recent deal Cineplex reached to launch TimsTV digital signage at Tim Hortons (TSX:THI) locations across the country.
But Jacob said that those figures were also helped by the company pocketing all of the revenues from advertising on Empire screens, which clouded over some reluctance from advertisers.
"The media business has been a bit tougher than normal because the weather (is) keeping retailers away from spending," he said.
Jacob added that it's too early to tell whether the trend will continue throughout the year.
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