China's Dalian Wanda Group, led by the country's richest man, Wang Jianlin, reported a 13.9 percent drop in revenue for 2016, due to a slump in the conglomerate's core commercial property business.
The group said Saturday that operating income rose to 254.98 billion yuan ($36.96 billion at current exchange rates) in 2016, while unaudited net profit grew by "double-digits." The company did not release profit data, nor a full-year revenue total for 2016 beyond noting the 13.9 percent decline. Wanda's total revenue in 2015 was 290.2 billion yuan. Last year's decline marks the first revenue dip in 11 years at the company.
Real estate sales also made up less than 50 percent of Wanda's revenue for the first time ever in 2016. Wanda's commercial real estate arm, which owns over 130 major commercial plazas, saw income fall 25 percent to 143 billion yuan.
Over the past five years, Wang has been mounting an aggressive diversification into what Wanda calls the "culture industry," comprising the entertainment, sports and tourism sectors. Believing that the high-growth era for China's real estate sector is in its twilight, Wang hopes to capitalize on Beijing's push to transition the country to a consumer-led economy. The company also has sought to diversify overseas as China's GDP growth cools.
Last year, Wanda acquired U.S. film studio Legendary Entertainment for $3.5 billion and Dick Clark Productions, owner of the Golden Globe Awards and Miss America pageants, for $1 billion. In December, Wanda-owned AMC Entertainment completed acquisitions of Carmike Cinemas and Odeon and UCI Cinemas in the U.K., becoming the largest movie theater operator in both North America and Europe.
Wanda reported Saturday that income from its global film operations climbed 31.4 percent in 2016 to 39.2 billion yuan.
Wanda opened 677 new cinemas around the world last year, hitting a total of 6,788 screens. In China alone, the company added 1,391 screens. At the end of 2016, Wanda's global totals were 1,352 cinemas and 14,347 screens.
Wanda's Culture Industry Group, which comprises the company's film production and exhibitions businesses, theme parks, sports holdings and children's entertainment, saw sales climb 25 percent last year to 64.1 billion yuan.
Reflecting Wanda's massive expansions into the theme park business, tourism income was up 37.1 percent in 2016 to 17.43 billion yuan. Wang has pledged tens of billions to build 15 mega-resorts, dubbed "Wanda Cities," across China by the end of the decade. The company also is building the world's largest film studio in eastern China, which began partial operation in November.
Last year, Wanda was forced to press pause on plans to publicly list core business units in China. The group was looking to merge its movie production subsidiaries, including Legendary, with its local exhibition business, Wanda China Line, which is listed on the Shenzhen stock exchange. Wanda abruptly backed away from that plan in August, however, saying that Legendary needed to show that it can turn a profit on its own before a merger. In May, The Hollywood Reporter reported that Legendary lost more than $500 million in 2015.
Wanda pulled Dalian Wanda Commercial Properties off the Hong Kong exchange last year, aiming to relist in Mainland China, where valuations usually have been much higher. Wang faces challenges in bringing the unit to an IPO in Shenzhen or Shanghai, however. There is a years-long backlog of companies seek regulatory approval for IPOs, and the government has increased scrutiny of "backdoor listings," the practice of buying and merging with small publicly traded companies to skip the usual review process. Nonetheless, Bloomberg reported in November that Wanda was in talks with several publicly traded takeover candidates.