CJ CGV Passing Through the Worst Phase Amid Theater Closures Due to COVID-19

The CGV Sungshin Women's University Entrance branch in Seongbuk-gu, Seoul, confirmed as a place visited by the fifth confirmed case of the novel coronavirus inflammation, has suspended operations for the second day on the 2nd of last month. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Kum Boryeong] CJ CGV is analyzed to be going through its worst phase.

According to Hyundai Motor Securities on the 29th, CJ CGV's consolidated sales for the first quarter of this year are estimated at 275.2 billion KRW, with an operating loss of 53.2 billion KRW. Sales have decreased by 40.8% compared to the previous year, and operating profit has turned into a loss.

CJ CGV is experiencing business disruptions caused by the novel coronavirus disease (COVID-19) spreading across all business sectors. Following the suspension of operations at all theaters across China on January 24, screenings and operations in Turkey have also been temporarily halted since the 17th. Vietnam and Indonesia have also entered partial shutdowns, making it difficult to predict the normalization timeline considering indefinite delays in new production and releases.

The domestic situation is also unfavorable. From January 1 to the 25th, the number of domestic viewers was 25.67 million, a 50.6% decrease compared to the same period last year. As of this month, the number of viewers has plummeted by 85%. Accordingly, CJ CGV decided to suspend operations at 35 theaters starting this weekend. Other theaters plan to operate some screens and reduce the number of screenings. Employee work schedules will also shift to a three-day workweek, and voluntary retirement and unpaid leave are expected to be implemented.

However, the possibility of liquidity risk materializing is analyzed to be not very high. Researcher Hwang Seongjin of Hyundai Motor Securities explained, "This is because the effect of external funding raised by CGI Holdings in November last year, along with company-wide cost-cutting efforts and proactive support measures from policy authorities, are expected to accompany this."