IMAX posts first drop in annual profit since 2016 as investments in expansion outpaced growth in box-office receipts

IMAX China’s 2018 net profit fell 2 per cent to US$42.76 million, while sales declined 7 per cent to US$117.5 million

The company showed 57 movies in its wide format last year, six more than in 2017, including such Hollywood blockbusters as Aquaman and China’s home made fare as Operation Red Sea

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An IMAX theatre poster advertising the experience of watching the superhero movie in a wide screen. SCMP Pictures (UNDATED HANDOUT)

Published: 3:36pm, 27 Feb 2019Updated: 9:01pm, 27 Feb 2019

IMAX China Holding, a unit of the Canadian company that patented wide-format film, posted its first decline in annual earnings since 2016, as its investments for expanding its theatre network outpaced the growth in box-office receipts from screening its movies.

Net profit fell 2 per cent to US$42.76 million last year, missing the US$48.61 million estimate in Bloomberg’s survey. Sales declined by 7 per cent to US$117.5 million, below the US$126.75 million expected by analysts.

The company’s theatre network – specially constructed and equipped with wide horizontal screens to show IMAX-format movies – expanded by almost a fifth last year to 639 cinemas across mainland China, Hong Kong, Taiwan and Macau. That increased its maintenance cost, which added 11 per cent to its US$98.5 million in overheads.

IMAX showed 57 movies last year in the wide format, six more than in 2017, covering both Hollywood blockbusters such as Walt Disney Studios’ Avengers: Infinity War, based on Marvel Comics superhero team, as well as China’s home made fare including Operation Red Sea. Warner Brothers Pictures’ Aquaman, based on the DC Comics character of the same name, opened to a record US$10 million weekend in IMAX theatres when it was shown in December.

Chinese actress Li Bingbing at the US premiere of Warner Bros’ The Meg at the TCL Chinese Theatre IMAX in Hollywood on 6 August 2018. The joint US-Chinese production, which was released in RealD 3D, was also shown in IMAX format. Photo: EPA-EFE

“Over the last six months, our box office performance and revenue generating power of the network has been on the upswing,” said IMAX China’s chairman Richard L. Gelfond, in a press release.

That growth brought IMAX’s box office receipts to US$337 million, up 16 per cent from a year earlier, as China’s expanding middle class devoted more of their disposable income to entertainment and leisure.