Increased spending on high-profile films including The BFG and Now You See Me 2 have hammered first-half profits at Entertainment One, sending shares in the owner of Peppa Pig tumbling more than 11%.
Entertainment One – maker and distributor of films and TV shows including the Steve Jobs biopic, the Hunger Games and Twilight franchises, Grey’s Anatomy, Rookie Blue and Oscar winner Spotlight – reported an 80% year-on-year slump in pre-tax profits to £3.7m in the six months to 30 September.
The company, which rebuffed a £1bn offer from ITV in the summer, blamed the profit fall on “increased theatrical investment” at its film division which it expects to recoup in the second half of its financial year, with high-profile releases such as sci-fi film Arrival and The Girl on the Train.
Adjusted pre-tax profits came in at £24m, well short of City expectations of £37m to £40m, which sent the company’s shares down 11%.
Entertainment One, which is headquartered in Toronto but listed on the London Stock Exchange, increased total revenues by 19% to £401m.
The company’s TV division, which includes the Mark Gordon Company, maker of shows such as Ray Donovan and the newly launched Kiefer Sutherland series Designated Survivor, saw revenues rise by 34% to £144.5m.
Revenues at the family division, which includes the $1bn Peppa Pig franchise, rose by 16% to £37.9m.
“Whilst theatrical investment has impacted profitability in the period, we will see the financial benefits of this investment delivered in the second half of the financial year,” said Darren Throop, chief executive of eOne. “The group remains on track to deliver full-year financial performance in line with management expectations.”
The company also announced the departure of chief financial officer Giles Willits, who has been at the company almost a decade. He will be replaced by Joe Sparacio, who recently stepped down as finance chief at Imax after nine years.
