Melissa Disrupts Palace’s Earnings

• For the December quarter, Palace Amusement’s (PAL’s) performance was materially impacted by the passage of Hurricane Melissa in October 2025, alongside generally softer cinema traffic. These headwinds widened net losses to J$87.82Mn, compared with a loss of J$26.41Mn in the corresponding period last year.
• Revenue contracted sharply by 43.3% year over year to $196.86Mn, reflecting softer cinema attendance and the closure of its Montego Bay location following hurricane damage. The location remains closed as Palace continues to assess the damage and work with its Insurers to settle claims.
• With topline performance under pressure, Palace recorded a gross loss of $23.58Mn. Administrative expenses of J$49.49Mn further deepened the operating deficit to J$73.02Mn. Elevated finance costs of J$14.80Mn compounded the weakness, weighing further on bottom-line results for the quarter.
• The weak December quarter exacerbated year-to-date performance. For the six months ended December 2025, net losses widened to J$115.03Mn, compared with J$62.86Mn in the prior year. Revenue declined 20.1% to J$553.37Mn, while operating losses expanded to J$86.14Mn, underscoring the sustained drag from hurricane-related disruption and softer film traffic.
• In 2025, the global cinema exhibition industry recorded only modest growth of approximately 8%, masking a broader structural slowdown as consumer preferences continue to pivot toward streaming platforms. This secular shift has intensified competitive pressures on traditional cinema operators, compressing margins and limiting pricing power.
• However, emerging demographic trends may provide a counterbalance to these structural headwinds. According to research conducted by National Research Group (NRG), children and pre-teens, particularly Generation Alpha (those born between 2013 and 2025) demonstrate a stronger preference for the theatrical experience relative to older audiences. This cohort could play a pivotal role in revitalising cinema attendance over the medium term.
• Against this backdrop, Palace intends to capitalise on this opportunity by enhancing the in-theatre experience and positioning itself as more than just a box office operator. The strategic focus is to expand its footprint within the broader entertainment ecosystem, capturing a greater share of consumer discretionary spending and reinforcing the long-term earning potential of the business.
• Since the start of the year, PAL’s stock price has decreased by 5.1%, to close at $3.43 and $0.93, respectively, on February 23, 2026.

(Sources: Palace Amusement Company Ltd. and NCBCM Research)