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Cineplex Climbs to All-Time High on Record Sales in 2012

Cineplex Inc., Canada’s largest movie theater operator, surged to an all-time high after posting record sales and attendance in 2012 with superhero blockbusters such as “Marvel’s The Avengers” and “The Dark Knight Rises.”

The stock rose 1.6 percent to C$32.97 in Toronto, a record since the shares began trading in November 2003. Cineplex, which owns a 70 percent market share in Canada, has risen 31 percent in the past 12 months, outperforming the 2 percent gain in the S&P/Toronto Stock Exchange Composite Index.

“We’re continuing to grow all the businesses that we’re in,” Chief Executive Officer Ellis Jacob said in an interview. “For us it’s not about what the stock is doing today but three to five years from now.”

Initiatives such as its cloud storage service, which allows customers to purchase movies online, and the “Scene” loyalty card program in partnership with the Bank of Nova Scotia that has 4.3 million members, will keep Cineplex competitive in a changing entertainment landscape, Jacob said.

Net income at the Toronto-based theater operator tripled to C$32.7 million, or 52 Canadian cents a share, in the fourth quarter, from C$10.9 million, or 19 cents, a year earlier.

Media revenue was the main surprise, said Haran Posner, an analyst with RBC Capital Markets. It rose 8.1 percent last quarter to C$31 million, while Posner was anticipating a 5 percent decline, largely due to growth in Cineplex’s signage business.

Installation Projects

“Growth this quarter was more impressive given the difficult comparison in the fourth quarter of 2011,” Posner, who rates the stock outperform, said in a note to clients. “Cineplex Digital Media has benefited from several large equipment installation projects.”

The company has also benefited from using its existing infrastructure and sales teams to support the signage business, Jacob said.

“It’s not exactly reinventing the wheel, it’s what we do every day,” he said.

Revenue rose 9.4 percent to C$1.09 billion in 2012, the highest in its history. Theater attendance of 71.2 million people, up 7.8 percent year-over-year, was also a record.

Box office revenues jumped 11 percent to C$638.3 million, an annual record, while concession sales advanced 13 percent.

Superhero team-up movie “The Avengers” and “The Dark Knight Rises,” the conclusion to Christopher Nolan’s Batman trilogy, accounted for 10 percent of Cineplex’s total box office in 2012, the company said.

“Skyfall,” the latest James Bond movie, “The Hunger Games” and “The Amazing Spider-Man” rounded out the top five.

To contact the reporter on this story: Eric Lam in Toronto at elam87@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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