Thu | Jul 18, 2024

Main Event earnings stumble in shifting market

Published:Wednesday | June 19, 2024 | 12:09 AMSteven Jackson/Senior Business Reporter
Dr Ian Blair, chairman of Main Event Entertainment Group Limited.
Dr Ian Blair, chairman of Main Event Entertainment Group Limited.

Main Event Entertainment Group Limited, MEEG, a provider of stage and lighting, indicated that some large parties and events, including carnival, have been scaling in size, resulting in lower margins for promoters like itself amid a changing entertainment market that is yet to recapture its pre-pandemic vibe.

Instead of banking on the small and medium events, MEEG intends to double down on supplying equipment for large events.

“The robustness of the entertainment sector has declined from the highs post-pandemic. Most of the larger businesses have reduced their market spend and some are resorting to much smaller events whereby the margins are substantially reduced,” Main Event Chairman Dr Ian Blair told the Financial Gleaner.

This shift has impacted Main Event’s financial performance, as the company traditionally caters to larger events with higher profit margins. In response to these changes, MEEG has “strategically” chosen not to compete for smaller events.

“MEEG has taken a calculated decision to take a different approach as to compete for some of these events would put us at a loss which would be difficult to justify to our shareholders,” said Blair.

For the quarter ending April, the company reported a 21 per cent dip in revenue to $418.6 million from $531.9 million in the prior year. Concurrently, quarterly net profit plummeted by three-quarters to $20 million from $74 million.

The softening of revenue flows also show up in the company’s half-year numbers, with its turnover falling $1.16 billion over the six months to $986 million. Profit also slipped from $192 million to $120 million at the entertainment company.

The company’s revenue in 2023 is said to have benefited from unusual events. As such, while its 2024 half-year numbers fall below the 2023 outturn, they are twice the $492 million levels achieved in at HY2022, a review of the numbers show.

Still, MEEG’s traditional revenue sources are shifting with a dip in marketing spend by some major clients. Additionally, the activity for Carnival Jamaica 2024 was “lower than normal,” the company said.

Blair offered no take on why the shift in spending pattern by businesses is happening.

It’s happening in an environment of high interest rates, which had poured additional costs on the financing of business operations, and inflation levels that are still not fully back in target range.

Companies are trying keep revenue growing amid inflation, and some are slashing costs to grow their bottom line.

MEEG has invested in maintenance to ensure the upkeep of its audio, visual, and lighting equipment. These investments have temporarily impacted its margins.

“With the capital spend of approximately $270 million in the last two years out of internally generated resources, it has put us in a position to move in a different direction,” said Blair.

Main Event’d total assets fell slightly by three per cent to $1.2 billion in April. However, receivables decreased by 29 per cent, and loans decreased by 30 per cent, reflecting the company’s efforts to streamline operations and improve cash flow management.

Despite the challenging quarter, MEEG’s capital position strengthened by eight per cent to $933 million.