Headline, Industry News

Cineplex Q3 profit $9.3M

TORONTO (CP) _ Third-quarter profits at Cineplex Entertainment LP (TSX:CGX.UN) soared 63.1 per cent to $9.3 million as Canada’s largest movie exhibitor booked record revenues and announced a new loyalty program with Scotiabank (TSX:BNS). The 132-theatre partnership, owned 59 per cent by the Cineplex Galaxy Income Fund (TSX:CGX.UN) with the rest controlled by Onex Corp. (TSX:OCX), said Thursday the improved earnings reflect robust box-office receipts and the success of its Famous Players acquisition.

"The Canadian industry box-office revenues for the third-quarter of 2006 were up 3.1 per cent versus last year," CEO Ellis Jacob said in a conference call with analysts. "By comparison, I am very pleased to advise that Cineplex’s box-office revenue for the quarter was up eight per cent."

Same-store box office revenues increased 5.5 per cent, year-over-year, and average ticket price was $8.09 for the quarter, compared with $7.76 before. Total revenues, meanwhile, reached a record $199 million, compared with $151.9 million in 2005. Distributable income per unit for the quarter ended Sept. 30 was 46.3 cents, up from 20.6 cents in the prior year.

"These results reflect the work that has been done during the past year by our management and staff in bringing Cineplex and Famous Players together," Jacob added. "We have realized greater synergies than we originally planned, and have identified new ways to capitalize on opportunities to grow revenues and profits."

The partnership _ which operates under the Cineplex Odeon, Famous Players and Galaxy marquees _ said its five-year agreement with Scotiabank will include the creation of a customer loyalty program to launch in 2007. The deal, which has some renewal options, includes media rights and naming rights for five flagship Cineplex Entertainment theatres. Financial terms were not disclosed but the deal was expected to have a positive impact in 2007.

"This unique partnership will enable Canadians to earn rewards by doing the things they enjoy, like going to the movies, or doing their everyday banking," Scotiabank CEO Rick Waugh said in a release.

Meanwhile, Cineplex executives are reviewing the proposed tax changes for income trusts announced by the federal government on Tuesday.

"The fund is considering this announcement and the possible impact of the proposed rules to the fund," said chief financial officer Gord Nelson.

While declining to speculate on the fund’s status when the new rules come into effect in 2011, he said: "Our focus has been and will always be maximizing unitholder value and this includes minimizing distribution risk."

Looking ahead, Cineplex is predicting a strong box-office results to continue into 2007 as Hollywood prepares to release third instalments of the Spider-Man, Shrek and the Pirates of the Caribbean franchises. Cineplex units were down a penny to $11.23 near midday on the Toronto Stock Exchange.