KUALA LUMPUR (March 5): PPB Group Bhd, which operates Golden Screen Cinemas (GSC), said on Tuesday it expects a tough year ahead for its film exhibition and distribution business, as the Hollywood writers' guild strike has affected supply of content in the medium term.
To offset the impact, GSC is shifting its focus to local and regional movies, including participating in local film production, to gain better control over the content at its cinemas, Koh Mei Lee, who leads PPB's entertainment business unit, said at the group's earnings briefing. GSC is working on co-producing local movies on profit-sharing, with costs ranging between RM8 million and RM20 million for each production, she noted.
"After the [Covid-19] pandemic, both Malaysia and Vietnam have witnessed steady recovery [in terms of admission]. However, if you compare it with pre-pandemic levels, the recovery in 2023 was slower than expected, because of the unprecedented strike," said Koh.
Box office revenue in Vietnam recovered to 92% of pre-pandemic levels, thanks to local movies there. However, the recovery was slower in Malaysia at only 75%, she noted.
The shift comes at a time when the cinema industry is still reeling from the twin strikes by Hollywood actors and writers, which have disrupted major film and television productions.
For PPB, the company's film-and-distribution segment suffered a larger net loss of RM120 million for the financial year ended Dec 31, 2023 (FY2023), compared with RM17 million for FY2022, mainly due to the impairment of cinema operations and assets. The segment would still be in loss by RM8 million due to higher operating costs if the impairments were excluded.
"For Malaysia, what we have is local titles and regional titles. We have seen titles coming from China, Singapore, India and Indonesia helping to supplement the period when Hollywood titles were lacking," Koh said.
For 2024, GSC has three co-productions in the pipeline, including Legasi: Bomba the Movie, Takluk and Reversi.
GSC expects contributions from events and sales of food and beverages to partially cushion the impact of the strike, Koh said. Further, she stressed that strong titles would still draw moviegoers, even as consumers are increasingly cautious about their spending.
"We notice that when there are strong titles, people still come to the cinema, and it does not affect our premium cinemas, which is a different category. That is one of the reasons why we started the ultra-luxurious Aurum Theatre at the Tun Razak Exchange," she said.
She said the group saw an occupancy rate of over 50% in some of its Imax cinemas over the opening weekend of Dune: Part 2, which indicated that consumers are still willing to pay for a premium experience at cinemas.
"We will be looking at some of the pricing adjustments, but it will only be minimal," she said. "We want to keep it very affordable, so that cinema-going is still one of the most affordable [forms of] entertainment we can get."
Overall, PPB's full-year net profit stood at RM1.39 billion, falling by 36.53% year-on-year from RM2.2 billion, while revenue also dropped 7% to RM5.72 billion from RM6.15 billion a year ago.
At the time of writing on Tuesday, the counter had risen by four sen or 0.26% to RM15.32 per share, valuing the group at RM21.79 billion.