Profits up at Odeon cinemas despite home viewing and piracy

The company behind the Odeon chain of cinemas increased its profits by almost 9 per cent last year despite an increase in the availability of pirated films and "home cinema" operators like Netflix.

In its financial statements for the year ended December 31st, 2015, United Cinemas International (Ireland) recorded a before-tax profit of €1,245,000 compared with €1,133,000 in 2014.

Turnover increased 8.6 per cent to €11,730,000 during the year, and directors said they expect this trend “will continue”. The increase in turnover, however, was offset to a large extent by a corresponding increase in operating costs, labour and overheads.

There was a dividend of €2,300,000 paid out in 2014, but the directors did not recommend a payment on this occasion.

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The company said the main risk to the business, which operates 11 cinemas in the Republic, was lower attendances.

Attendance figures

“Though medium-term attendance figures are broadly stable, there is some volatility year-on-year, depending on the film slate, which in turn depends on production from Hollywood and local content in each country.

“An increase in the availability of pirated films, changes to customer film viewing habits or the level of competition from other exhibitors may also have an impact on attendance.”

However, the risk to earnings “is mitigated” by a strategy to drive attendance at each site, as well as cost savings in film hire and staff, which reduce at lower attendances, and by controlling discretionary costs and capital expenditure.

The directors also note that some commentators “are concerned” about the impact of the increasing penetration of home cinema equipment and online film viewing on cinema attendance.

Complementary

“Similar concerns were expressed in previous decades with the introduction of television, video cassettes and DVDs,” they said. “The directors believe that cinema provides a different and better film experience than home entertainment.”

These options “are generally complementary rather than competitive”, while cinema “continues to offer excellent value” in the going-out market.

They expect “ongoing demand” for the cinema experience for the foreseeable future.