CGV Deficit Trend Continues... Company Size Becomes Leaner (Comprehensive)

Significant Reduction in Fixed Costs Including Labor, Rent, and SG&A Expenses
"Issuance of 300 Billion KRW New Convertible Bonds Scheduled for Early Next Month"

On the 18th, CGV Yongsan I'Park Mall in Seoul was less crowded than usual. On this day, CGV announced that it will raise movie ticket prices by 1,000 won starting from the 2nd of next month to overcome the crisis caused by the prolonged COVID-19 situation. Photo by Moon Honam munonam@

CJ CGV announced on the 7th that its operating loss for the first quarter was 62.8 billion KRW, slightly down from 71.6 billion KRW in the same period last year. CGV explained that this was the result of "cost reduction and operational efficiency improvements, as well as a turnaround to profitability in China and Vietnam."

In fact, first-quarter sales remained at 172.5 billion KRW, a 29.1% decrease compared to the same period last year. Domestic sales, in particular, were 52.3 billion KRW, down 59.1% from the previous year. Amid continuous losses, the company has slimmed down. Fixed costs such as labor, rent, and selling and administrative expenses were significantly reduced. CGV stated, "We have achieved a groundbreaking change in our cost structure," adding, "This is an element that raises expectations for second-quarter performance."

Unlike domestic results, overseas performance is encouraging. Sales in China reached 90.8 billion KRW, about six times higher than the same period last year. Operating profit turned positive at 2.3 billion KRW. Operating profit in Vietnam also increased more than fourfold to 3.2 billion KRW compared to the same period last year. CGV explained, "Local content led the box office success and drove the performance." However, in Indonesia and Turkey, some branches suspended operations due to the impact of COVID-19, resulting in losses of 4.3 billion KRW and 4.2 billion KRW, respectively.

Heo Minhoe, CEO of CGV, stated, "We plan to issue 300 billion KRW of new convertible bonds early next month to dramatically improve our financial structure." He added, "We will focus on content marketing that maximizes results while accelerating the paradigm shift of theaters."