Cineworld benefits more than expected from Regal Entertainment deal

The big-risk purchase seems to be paying off for the cinema chain through savings and revenue.

Article updated: 14 March 2019 11:00am Author: Ian Forrest

  • Positive results see shares rise by 6% in early trading.
  • Investors welcome 18% rise in dividends which will be paid on a quarterly basis.
  • We continue to recommend the shares as a ‘buy’ for higher-risk investors seeking a balanced portfolio.

Today’s results showed encouraging signs from the purchase of US cinema group Regal Entertainment. Earnings on a proforma basis, assuming Regal had been owned for the whole period, rose 9.4% to $1.7bn with admissions up 2.6% to 308.4m and revenue up 7.2%. In the US revenue rose 8.6% with a 3.3% increase in the UK.

Bigger savings, bigger profits

The scale of the purchase for Cineworld can be seen by the fact that on a statutory basis profits more than doubled to $349m. The potential to make cost savings was always one of the main drivers of the Regal purchase and the company said today savings would be even better than previously expected at $150m this year. Better still for investors was the news that the dividend has been raised by 18% and will be paid in quarterly instalments in the future.

The good news was greeted warmly by the market today and the shares rose 6% in early trading. The size of the Regal purchase last year was a risk for Cineworld’s management but the early signs are certainly positive and there could be much more to come for investors as improvements are made to Regal over time.

Our View on Cineworld - Buy

For that reason, along with the potential for further dividend rises and another year of blockbuster films in the pipeline, we continue with our buy recommendation for investors willing to accept a higher level of risk.

If you're looking to invest in the Travel & Leisure sector and you're not currently a customer of The Share Centre, sign up today. You can also view the full range of Travel & Leisure companies and their share prices.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Ian Forrest portrait photo
Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.