Cathay Cineplexes owner sinks deeper into red with $101.3m loss as cinema woes mount
Goh Ruoxue for The Business Times
Cathay Cineplexes owner mm2 Asia widened its net loss in the second half of its fiscal year by more than 10 times to $101.3 million from $8.7 million in the previous corresponding period.
This comes despite a 21 per cent increase in revenue for the six months to March to $79.7 million from $65.9 million in the year-ago period, according to financial results released on Aug 28.
No dividend was declared.
The biggest blow to mm2 Asia's bottom line came from its share of losses of associated companies, which stood at $75 million for the half-year, up by more than nine times from $7.2 million the previous year.
For the full year, its share of losses of associated companies stood at $82.8 million, up from $11.9 million the year before.
The group said that this was due mainly to the write-off of its cinema business mm Connect.
Executive chairman Melvin Ang said: "The second half of FY2025 was exceptionally challenging, especially with the legal and financial issues from our cinema business. We recognise our cinema landlords as valued partners in our business ecosystem. However, the road to recovery has been longer than anyone expected, we can understand their position.
"We are still actively engaging with all our creditors to negotiate fair and amiable solutions to ensure the Group's long term viability."
The company said in July that it is evaluating all available options to address its financial challenges, including winding up the cinema chain. Other options include continuing negotiations with Cathay's landlords to restructure existing obligations while preserving operational continuity.
Six Cathay Cineplexes cinemas have closed in the last three years, leaving four still in operation at Causeway Point, Century Square, Downtown East and 321 Clementi.
For the full year, mm2 Asia posted a net loss of $105.2 million, widening the $5.7 million loss it incurred in the year-ago period.
Revenue came in at $165.1 million for the full year, down 13.9 per cent from $191.8 million a year ago.
Basic loss per share for the full year from continuing operations stood at 1.93 cents, compared with0.17 cent the year before.
On its outlook, mm2 Asia said: "The cinema segment faces pronounced challenges: attendance has not fully rebounded following pandemic-driven disruptions, with competition from streaming platforms and tight operating margins placing pressure on profitability."
It continued: "This is compounded by rising operational costs and evolving audience behaviours, making sustained recovery in the cinema business an uphill battle and prompting consideration of restructuring, mergers or divestiture."
Concert and live event operations also reflect cautious optimism, said the company. "While live entertainment has returned to pre-pandemic levels in many markets, revenue in this segment fluctuates with event cycles, scheduling, and consumer sentiment, suggesting that growth will remain uneven in the near term."
That said, the group maintained that movie production remains buoyed by resilient demand for Asian content and a rebound in local titles, all of which position it to maintain growth despite volatility in international releases.
"The group continues to observe optimistic momentum in movie production, underpinned by regional demand and a strong pipeline of new projects, even as global box office trends gradually recover."
mm2 Asia concluded that its strategic direction for the fiscal year is built upon its three core pillars of embracing new tools such as generative artificial intelligence; expanding into high-potential adjacent areas, such as interactive media; as well as spinning off of non-core divisions to free up capital.
Shares of mm2 Asia closed up 25 per cent, or 0.1 cent, at 0.5 cent on Aug 28, before its results announcement.
