Calls for CEO to step down grow louder
LONDON — Dark clouds are gathering around the British leisure group Rank, which unveiled another unimpressive set of financial results Tuesday despite increased profits from Universal Studios Florida, Odeon Cinemas and Deluxe.
In recent weeks Rank has been dogged by bid rumors and a whispering campaign against chief exec Andrew Teare, as investors start to lose patience with the company’s long-term underperformance.
Rank’s profit before tax and exceptional items edged up 3.6% to £87 million ($142.7 million) for the first six months of 1998, which was less than many analysts were predicting.
Sales rose 5.3% to $1.478 billion, while operating profit was up 12.2% to $165.6 million.
Although Teare declared himself satisfied with this steady performance, the figures are nowhere near buoyant enough to ease the mounting pressure for radical action. Teare, who was hired two years ago to shake up Rank, rejected any suggestion that he might step down, even though the calls for his exit are growing louder.
But amid all the gloom, Rank’s assets in the entertainment business remain its brightest performers. Deluxe, the film processing and video duplication arm which services several Hollywood studios, improved its operating profit by 45% to $47.6 million, with sales up 4.4% to $430 million.
Video duplication was particularly robust, and looks set for a strong second half when the company will be responsible for producing the video units of “Titanic.”
Rank’s share of operating profit from Universal Studios Florida, in which Rank is a 50% partner, rose 30% to $21.3 million. Mardi Gras themed evening events and the new Twister ride helped to improve both sales and profit at the park. Turnstile admissions were up 12.9% in the six month period.
The Odeon Cinema chain in the U.K. increased sales by 17.2% and operating profit by 5.8%, despite the fact that five major London theaters have been partially closed for renovation. The flagship Odeon Leicester Square reopens today with a gala premiere of “Armageddon.”
But these positive advances were largely offset by the weak performance of Rank’s nightclubs and holiday’s business.