Some profit, but no bright outlook for Main Event
Large events equipment-rental and logistics firm Main Event Entertainment Limited has reported a profitable July 2021 third quarter, with its net profit of $28.7 million representing a significant upturn from the loss-making similar three months last year and a doubling of its pre-pandemic net profit for the similar period in 2019. There was also a big 2021 quarter-over-quarter jump, but the company is nevertheless announcing a lacklustre outlook.
Current and future actions seem more focused, management conceded, on reducing the company’s debt burden.
This comes as a brief flicker of hope for a return of parties and other social events has been scuttled by a quick return to government-imposed restriction on entertainment events in response to increases in COVID-19 infections, hospitalisations, and deaths following a brief relaxation of the ban in July.
“Restrictions due to the pandemic have now extended through to the final quarter of two fiscal years,” Main Event’s management said in the preface to its latest financials.
The Government’s short-lived relaxation of COVID-19 containment measures during the quarter and the hosting of some large entertainment events appear to have helped Main Event ramp up revenue to $243.4 million from $60 million in the similar quarter of 2020. The increased income, however, was nearly just about half the firm’s pre-pandemic levels of $468.6 million earned in the similar quarter of 2019.
Year-over-year, the company’s $28.7 million profit for the July 2021 quarter is a major improvement on the $45.5 million loss it racked up in 2020 and a near doubling of the $14.7 million profit in the corresponding quarter of 2019 – before the pandemic.
“Looking forward, we are expecting more uncertainty and volatility in our business, with new variants of the COVID-19 virus and with renewed restrictions on movement within our region,” the Main Event document gave a bleak forecast for the industry in which it operates.
“While we are hopeful for successful containment of these new variants worldwide and pleased to see progress and momentum in Jamaica’s vaccination efforts, we accept that the process to recovery will not be a quick fix,” according to the company document.
During the uncertainty, the company will continue to focus on debt reduction rather than acquisition of struggling entertainment rival entities, its management has made clear.
“Main Event is not presently looking to acquire any entertainment companies. I think with our related companies we have a full suite,” Director Dr. Ian Blair said in response to Financial Gleaner queries.
The company’s loans are at $116.3 million from $137.9 million a year earlier. The firm has paid down on its debt but also converted an existing US-denominated loan from Sagicor Bank to local Jamaican currency. That conversion is expected to result in savings for the company millions per year, but the company director declined to give an estimate.
“Debt reduction has been our focus for the last 18 months as is very evident from our balance sheet,” he said.
Main Event’s long-term liabilities, which largely comprise debt, have been reduced to $167.2 million from $172.6 million in 2020 and $189.5 million in 2019.