The Rank Organisation moved Friday to reassure London’s financial community about its trading position, after two weeks of wild rumors concerning its debt level and the future of its film and TV interests.
The usually uncommunicative leisure group called a meeting of analysts to give an update on its performance since it delivered its half-year figures back in July.
Although the message was predictably downbeat, there were no nasty surprises, and this alone was enough to send the stock price immediately up 12 pence to 586 pence.
Rank’s market value has been on a downward curve for months, amid worries that the group’s diversity was hampering its ability to withstand the recession. Recent gossip suggested that Rank’s debt, already $ 1.4 billion, was spiralling, and that it was looking to sell off Odeon Cinemas, Pinewood Studios and Rank Film Distributors.
At Friday’s meeting, Rank asserted that its trading position had not worsened since July, allaying fears about its debt level. The company gave no indication of any improvement in U.K. trading, but did detect some “tentative signs” of a pick-up in the United States–although “it is too early to tell whether this will be sustained.”
Rank’s various film and TV businesses remain somewhat depressed, but there was no sign of plans for a sell-off.
Video duplication volumes are down 5% this year, and film processing volumes are down 2%. Admissions to the Odeon Cinemas chain, the largest in the U.K., are also lower than last year, but admission prices and ancillary spending have been higher.
The group continues to report losses in its video distribution business, but notes an improvement in trading this year. The division lost $ 35 million last year, but analysts expect the deficit to be reduced to about $ 22 million this year.