CJ CGV achieves first operating profit in H1 since pandemic

CJ CGV’s Chief Executive Officer Heo Min-hoi [Photo provided by CJ CGV]

CJ CGV Co., South Korea’s largest multiplex cinema chain, managed to swing back to an operating profit for the first time in nearly four years in the first six months of this year after its business was hit hard by the pandemic-driven social distancing rules.

CJ CGV announced in a regulatory filing on Thursday that it posted 1.7 billion won ($1.3 million) in operating profit in the first half of this year on sales of 795.3 billion won. The operating profit for the second quarter stood at 15.7 billion won.

“For the first time since the outbreak of Covid-19, we have achieved the milestone of transforming our half-year operating profit into positive territory,” said CJ CGV’s Chief Executive Officer Heo Min-hoi during a conference call.

The transition to profitability was driven by the success of blockbuster films like “City of Crime 3,” which surpassed 10 million viewers, and the premieres of blockbusters like “Fast & Furious” and “Elemental.”

The successful turnaround comes after a challenging period for CJ CGV, which saw promising sales of 995.7 billion won and an operating profit of 76.2 billion won in the second half of 2019.

In the first half of 2020, the company’s sales slumped to 284.9 billion won, and operating losses amounted to 202.1 billion won. In the following year, CJ CGV recorded an operating loss of 120.1 billion won in the January-June period, followed by a loss of 71.1 billion won in the same period of 2022.

Nevertheless, the company improved its financial performance in the first half of this year, up 72.8 billion won from a year ago.

In addition to its domestic market turnaround, CJ CGV’s overseas subsidiaries also displayed positive recovery trends.

In the second quarter, CJ CGV’s Vietnam subsidiary reported an operating profit of 5.9 billion won, up 92 percent from the same period in 2019, while the Indonesian subsidiary recorded an operating profit of 5.8 billion won, up 91 percent.

Notably, the Chinese subsidiary achieved a significant upswing in the second quarter, with sales doubling to 69.9 billion won, while operating losses narrowed by 22.1 billion won, reaching 6.2 billion won.

Another cinema company under the CJ Group, CJ4DPlex, also witnessed impressive results.

In the second quarter, CJ4DPlex reported sales of 35.6 billion won and an operating profit of 4.4 billion won. The success was driven by the popularity of original content like “BTS: Yet to Come in Cinemas,” which saw a remarkable increase from 0.3 percent of total sales in 2019 to 46.5 percent in the first half of this year.

Looking ahead, CEO Heo expressed the company’s commitment to completing ongoing capital expansion, which would lead to reduced borrowing costs, debt ratio reduction, and a strengthened financial structure, with a potential upgrade in credit ratings.

He also emphasized leveraging the anticipated synergy of the newly expected addition to the group, CJ Olivenetworks, to secure a stable profit structure and propel CJ CGV to a new level of success.

As summer unfolds, many captivating films are ready to enthrall moviegoers.

Following the recent premieres of Hollywood blockbusters such as “Mission: Impossible - Dead Reckoning Part One” and “Barbie,” a lineup of high-profile movies awaits, including “Smugglers” directed by Ryoo Seung-wan, “The Moon” by director Kim Yong-hwa, “Concrete Utopia” starring Lee Byung-hun, “Unofficial Operation” featuring Ha Jung-woo and Joo Ji-hoon, and “Oppenheimer” directed by the renowned Christopher Nolan.