Morgan Freeman and Johnny Depp in the Film Transcedence.
Entertainment group Village Roadshow has blamed a poor showing from Johnny Depp film Transcedence for an about face on its profit prediction for 2014.
Investors had a mixed reaction to the downgrade by he theme park and film company.
Village’s 2014 profit is likely to match or be lower than the previous year’s profit, Village told shareholders last week, due to poor tickets sales for the film Transcendence. Village had previously flagged an increase in profit for 2014 on the previous year’s $ 50.93 million result.
It also announced a lower-than-expected dividend of 15¢, saying it would consider a further 10¢ a share special dividend, ”potentially franked”, in either 2015 or 2016.
Baillieu Holst analyst Nick Caley said although ”swings and roundabouts are not totally unexpected in the cinema business”, he was surprised that the success of the Lego Movie had ”not picked up the slack across a number of divisions”.
Still, Mr Caley said he did not view the downgrade and dividend announcement as a ”significant dent in the overall investment view for Village Roadshow”.
Village Roadshow co-executive chairman Graham Burke told Fairfax Media earlier this year that Lego was ”great news, because we enjoy it in our theatres, we enjoy it in our distribution company, the DVD release will be enormous, and we also enjoy it as a half-owner of the copyright in our production company.”
Village Roadshow is also behind the new Tom Cruise film, Edge of Tomorrow which has opened strongly but faces strong competition from the low-budget teen heartbreaker, The Fault in Our Stars.
But fund manager Brian Eley said investors should keep in mind the volatility of film production.
”You have all the hype beforehand, and then it hits the screens and people can not turn up it all,” he said. ”It makes it a very volatile and risky business.”
Village shares surged through 2013 although are down slightly this year.
At $ 7.47, they remain weaker than analysts’ 12-month consensus price target of $ 8.27.
JP Morgan analyst Armina Soemino said the broker remained neutral on the company because the 76 per cent increase in its enterprise value/earnings before interest and tax over the past two years was “too much given the company has only achieved about 7 per cent EBIT growth over the same timeframe.”