Its results collapse, but Kinepolis keeps a strong cash flow

With only 12.1 million visitors to its venues in 2020, compared to 40.3 a year earlier (i.e. a drop of 70%), Kinepolis

mulled over. But the Belgian group indicates with its annual results that it has strong backs.

Kinepolis entered the crisis with a conservative debt ratio and a substantial liquidity reserve, further reinforced by the additional loan of € 80.0 million contracted at the start of 2021.

The group appears to be going through the crisis with confidence and should be able to withstand the negative effects of the Covid-19 pandemic for a while longer. At the start of the year, he had a € 171.0 million financial leeway. What to see coming and reassure. The CEO Eddy Duquenne indicates that the group “burned” only 32 million euros in cash last year while 40 million were invested in new complexes.

Fortunately, because while these complexes have been closed all over Europe and America (of the 110 complexes only 19 are currently open), its once brilliant results have collapsed. Theebitda was divided by 10 to 17.2 million euros and the group largely fell into the red with a net profit of – € 69.1 million, mainly due to the high depreciation linked to its important real estate position. Turnover crashes from 551.5 to 176.3 millions of euros.

In short, like Kinepolis, rare are the sectors, such as cinemas, to have been so affected by the health crisis. Last year, the sector lost 210 million in turnover in Belgium.

Initiatives have been taken to limit breakage: “Kinepolis on Tour“(drive-in), a home candy delivery service and a concept of private cinema, allowing privatize a room with a maximum of 10 people. Not enough to earn money, of course, but a way of supporting its infrastructure. The formula is already available in Luxembourg and will be in Belgium as soon as the complexes reopen there. Just like the watching Netflix productions, already offered in Luxembourg and Spain where theaters are open.

Thenet financial debt, excluding lease debts increased from € 417.0 million at the end of 2019 to € 513.3 million at the end of 2020, mainly due to negative free cash flow combined with investments in the construction of new complexes in the Netherlands, France and Canada.

In view of the result and the current circumstances, it will logically be proposed to the general meeting of the group of not to pay dividends for 2020just like it was a year earlier.

In theory, 2021 should be better. Eddy Duquenne was also wanted to be reassuring vis-à-vis the authorities. “We can reopen in perfectly safe sanitary conditions,” he pleaded, adding that the government should maintain a balance between the necessary health precautions and the population’s need for entertainment.

Even if the boom in platforms is hurting him, Eddy Duquenne does not seem to be overly dramatizing. “With the exception of a few, the big blockbusters have been postponed pending the reopening of theaters, this is proof that the experience of the theater remains strategic for the majors, they are the ones that generate the most income and especially the better margins.”

The perspectives of deconfinement have also given color to the Kinepolis action the last days. The group’s listing also benefited from the announcement of its American competitor AMC to reopen all its theaters in New York next month.

The management of the group has also taken advantage of the last few months to “deepen the business strategy”, which has led to a plan called “Entrepreneurship 2022 “ which, on the basis of new optimizations and innovations, should to support the recovery and its performance as much as possible from 2022.