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Village Roadshow Profits Down by a Quarter at Half Year

Bad weather hurting theme park attendance and a weak lineup of films that hurt its distribution business meant weaker financial results for Australian multinational Village Roadshow Limited.

For the six months to end of December – the first half of its 2015 financial year – the film and entertainment group reported revenues down 2% at US$417 million (A$470 million) and net profits down 27% to US$12.2 million (A$13.8 million) compared with the same period last year.

The bad weather affecting the East Coast of Australia particularly damaged its business in Sydney and the Gold Coast.

The company says the second half will be significantly better than the first, but still represent a drop on the 2014 financial year. “The second half of FY2015 is expected to be significantly stronger than the first half, however due to the results to 31 December 2014, it is estimated that VRL’s attributable net profit, before material items and discontinued operations for the full year will be in the range of A$46 million to A$52 million (US$40.8 million – US$46.1 million). This compares to a full year FY2014 result of A$56.5 million (US$50.2 million),” it said in a filing to the Australian Stock Exchange.

The second half line up of film releases is expected to help its Australian multiplexes recover their first half dip. In particular VR pointed to “The Imitation Game,” “American Sniper,” “Paper Planes,” “Fifty Shades of Grey,” “The Second Best Exotic Marigold Hotel,” “Insurgent,” “Jurassic World,” “The Avengers: Age of Ultron,” “Mad Max: Fury Road” and “San Andreas.” VR said that its 50% stake in Singapore’s Golden Village chain was performing “very strongly”, and did not explain why the unit’s profits fell from A$3.7 million to A$3.4 million.

The distribution business, which includes Australia’ largest distributor Roadshow Films, and since last year a 30% stake in New York-based sales agent FilmNation, was down 15%. But in the third quarter it is expected to be boosted by strong theatrical titles including “American Sniper,” “Paper Planes,” and “The Imitation Game,” but be partially offset by the disappointing performance of “Mortdecai.” The division will now also handle Australian home entertainment releases on behalf of Warner Bros., in addition to its existing theatrical films deal.

The company reported that the physical film retail business “continues to represent a healthy estimated total Australian market of over A$1 billion (US$887 million), approximately 84% from DVD sales and 16% from Blu-ray.” It also said that the Australian digital entertainment market “continues to expand and now represents approximately A$160 million (US$142 million) in annual revenue.”

The company has been a major investor in Chinese film production, through Village Roadshow Pictures Asia. The 2015 calendar year includes three Chinese releases: “Zhong Kui: Snow Girl and The Dark Crystal,” which debuted on Feb. 19 with an opening four day gross of US$31.2 million, “Mountain Cry,” and “Hide & Seek.”

U.S. production unit, Village Roadshow Pictures is aiming for 8-12 releases per year, through its co-financing deals with Warner Bros. and with Sony.

The company confirmed investments in Warner titles including: “Jupiter Ascending;” “Mad Max: Fury Road,” scheduled to be released in May 2015; Dwayne Johnson-starring “San Andreas,” scheduled to be released in May 2015; and Ron Howard’s “In the Heart of the Sea,” scheduled to be released in December 2015.

Upcoming releases being co-produced with Sony include: “Goosebumps,” scheduled to be released in October 2015; Will Smith-starring “Concussion,” scheduled to be released in December 2015; and Sacha Baron Cohen’s “Grimsby,” set for release in February 2016.

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