Hoyts hits profit via contrarian looping

Company still courting merger

SYDNEY — While some U.S. exhibitors have reported lower earnings this year, Hoyts Cinemas America is bucking the trend.

The 950-screen circuit added 133 screens and posted a 17.8% hike in B.O. revenues in the financial year ended July 1, parent Hoyts Cinemas said Wednesday.

The U.S. loop contributed earnings before interest, taxes, depreciation and amortization of A$45 million ($27 million), nearly half of Hoyts’ worldwide earnings of $60.3 million in the fiscal year.

“We have improved our position in the U.S. by opening six stadium-style megaplexes in the past year which have higher ticket prices ($6 average) and higher concession sales” than traditional cinemas, Hoyts CEO Peter Ivany said.

He noted Hoyts had taken write-downs on 12 nonperforming U.S. cinemas and asserted that all its 115 sites there are making money.

The company’s after-tax profits jumped by 64.4% to $23.2 million on a 33% jump in revenues to $302.1 million.

Reiterated outlook

Ivany repeated his view that the consolidation process in the U.S. exhibition industry will continue, predicting the eight chains that have more than 1,000 screens each will be whittled down to three or four.

He indicated Hoyts is still exploring options to merge its U.S. loop with another circuit, but declined comment on speculation that its recently formed co-venture in Latin America with General Cinemas could lead to further alliances with GC in the U.S. or other territories such as Mexico.

The prospect of a global economic slowdown is not likely to curb Hoyts’ plans to expand from 1,541 screens in 11 countries to 3,083 screens by the year 2003.

Ivany said Hoyts will move into Brazil next year and beyond, and that the company is exploring opportunities in Italy and Spain.

“A slowdown will impact the property markets, and we will build (cinemas) a bit slower, but so will everyone else,” said Ivany, who relocated to Hoyts’ U.S. headquarters in Boston this year to drive its growth in Europe and the U.S.

Hoyts has already decided to slightly scale down its U.S. building program although it plans to continue to add five or six megaplexes annually.

Return to Oz

Ivany stated he intends to return to Sydney next year and is well down the track to appointing a new CEO for Hoyts America.

Encouraged by the success of its new 12-screen Broadway cinema in Sydney, which includes three screens for upmarket product with a separate entrance and distinct decor, Ivany intends to extend that concept to future Hoyts cinemas at the Fox Studios in Sydney and in London’s Bluewater complex, and he looking at trying it in Rhode Island.

Ivany also disclosed he is negotiating to move Hoyts’ Sydney headquarters from downtown George Street to the Fox Studios.

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