Cherry AB losses down in third quarter

The publicly listed Swedish gambling group Cherry AB has posted its quarterly and 9 month interims to September 30, flagging increased revenues and a reduction in its losses, but heavy expenses due to big player wins and energetic marketing.

Q3-2014 highlights include:

* New turnover records across all business areas;

* Group revenue up by 29 percent at SEK 90.4 million (69.9);

* EBITDA at SEK -3 million (-4.4). EBIT amounted to SEK -7 million (-9.8);

* Loss less after tax at SEK -8.8 million (-11.8) equivalent to SEK -0.69 (-0.90) per share after dilution;

* Online Gaming revenues grew by 33 percent and deposits increased by 55 percent;

* Restaurant Casino increased turnover by 9 percent and EBIT increased by 23 percent;

* Cherry incorporated JPC Casino and had a market share of 65 percent (61) at the end of the quarter;

* Subsidiary Yggdrasil Gaming signed eight new contracts during the quarter and went live with five new operators;

* Turnover and earnings have been affected positively by MSEK 5.1 relating to a revaluation of the additional purchase price for Web Resorts.

* Group cash amounted to MSEK 47.1 (95.4) at the end of the period.

For the nine months year-to-date, the group reported:

* Strong growth within Online Gaming and Yggdrasil performing well;

* Group revenue up by 25 percent to SEK 239.8 million (191.3).

* EBITDA at SEK -11.4 million (-13.3). EBIT amounted to SEK -22.3 million (-22.0).

* Loss after tax amounted to SEK -24.0 million (-23.1) equivalent to SEK -1.84 (-1.76) per share after dilution.

* Online Gaming grew by 38 percent and deposits increased by 48 percent.

* Yggdrasil Gaming signed 15 new contracts and went live with seven new operators.

CEO Emil Sunvisson reported:

“The third quarter continued strong growth in sales, and new records set across all business areas. Cherry’s investments in new growth areas within online gaming present great opportunities, as well as significant challenges.

“Cherry continues to grow within online gaming through our long-term commitment to build strong brands, and improve the user experience on our gaming sites. We are particularly pleased for our players that we have had an unusually high number of lucky big winners during the third quarter. While this has impacted upon turnover and earnings, it has contributed positively by increasing brand satisfaction and loyalty among our customer base.

“In addition, the quarter saw substantial marketing efforts and customer acquisition bonus related expenses, which has influenced the figures. The fourth quarter has started strongly.

“Yggdrasil has continued to sign licenees and now has a very impressive customer base, especially considering that the company in the beginning of this year did not have a single external customer. Several new games have been launched, such as Reef Run, Magic Mushrooms, Pyrons and Fruitoids. Revenues will increase in line with a growing portfolio of games, and as new operators are signed up.

“Klubblo reported modest volumes during the quarter after an initial launch phase. However, as central government funding support for youth sporting initiatives wanes, Klubblo, the athletes’ own lottery that contributes directly to Swedish sports clubs, will become ever more important.”

Sunvisson observed that change in the Swedish gaming market is inevitable, and that Sweden will “quite rightly” be taken to the European Court of Justice after having, for too long, delayed re-regulation.

“We look forward to a gaming market that is open for everyone with the utmost importance placed on transparency and responsibility. We want to end the outdated [Svenska Spel] monopoly in the gaming market.

“We want to create additional jobs in Sweden and we want to compete in fair and equal market conditions,” he concluded.