Not too many corporations are enjoying a tripling of profits these days.
But that’s the result contained in the financial statements of Cineplex Galaxy Income Fund (TSX:CGX.UN), which were released on Thursday. The number isn’t an aberration either, with the Toronto-based owner of Galaxy Cinemas Red Deer enjoying a series of strong quarters despite the economic downturn.
“We’ve come off a record 2008 and then a record first quarter 2009 and now a record second quarter 2009,” said Pat Marshall, Cineplex’s vice-president of communications and investor relations.
In addition to record revenues that are 20 per cent higher than a year ago, Cineplex Galaxy’s net income of $19.9 million for the quarter ended June 30 was more than three times its 2008 profit for the same period.
Marshall said Cineplex Galaxy’s most recent numbers were helped by string of blockbuster movies this spring.
“There were over 10, $100-million films in the quarter versus six in the same quarter last year.”
But she added that her company has also received a boost from recession-weary consumers.
“I think what happens is during difficult economic times, people’s need for escapism is escalated,” said Marshall, pointing out that movie theatres are an appealing and affordable option.
“You can rent DVDs and you can do other things at home, but you still have to get out.”
The same applies to concession treats, she said.
“People use it as an opportunity to say, ‘We’re going to treat ourselves when we go.’”
This is evident from Cineplex Galaxy’s concession revenues of $74.2 million during the last quarter, up from $62 million a year earlier.
Marshall said the popularity of theatre outings is evident at Galaxy Cinemas Red Deer, which opened in the spring of 2008.
“That theatre has done extraordinarily well for us. We’re extremely pleased.”
Not only are local residents taking advantage of the opportunity to escape into the plot of a movie, they’re still attracted to the new facility, which boasts state-of-the-art features like digital projection equipment.
“All of those elements together, I guess you could say, have made the perfect storm in the most positive sense of the words.”
Even Cineplex Galaxy’s media division, which sells ad space on-site and commercial spots before movies, enjoyed an increase in profits during the last quarter — earning $16.3 million as compared with $14.1 million in 2008.
Marshall said many advertisers, including automotive companies, had a “wait-and-see” attitude late last year and early in 2009.
“What we’re finding now is advertisers are feeling more confident and are coming back.”
Despite her company’s current prosperity, Marshall acknowledged that the script could change at any time.
“We know our business is cyclical, and we know that you’ve got to ride the highs and work through the lows.”