Cherry AB reports muted half year performance

Stockholm-based online gambling group Cherry AB has reported its half year results to 30 June 2014, with record turnover numbers, but declines in EBITDA.

Highlights of the group’s Q2-2014 include:

* Group turnover up by 24 percent to SEK 76.4 million (61.6).

* EBITDA down SEK 4.1 million (-9.2).

* Profit after tax down SEK 7.1 million (-9.3)

* During the quarter SEK 51.2 million (143.4) was transferred to shareholders, corresponding to SEK 4.00 per share (11.20).

* Online gaming up 38 percent with deposits increased by 38 percent.

* Restaurant Casino increased turnover by 9 percent and EBIT rose by 21 percent. Now commands 67 percent of that market segment.

* JPC Casino was acquired.

* Yggdrasil Gaming signed three new contracts during Q2 and went live with one new operator.

* Group cash amounted to SEK 54.8 million (106.7) at the end of the period.

Cherry’s H1-2014 performance included the following:

* Strong growth within Online Gaming and Yggdrasil

* Group turnover up by 23 percent to SEK 149.4 million (121.4).

* EBITDA down at SEK -8.4 million (-8.9).

* Profit after tax SEK -15.2 million (-11.3)

* Online gaming grew by 40 percent and deposits increased by 43 percent.

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

Management said the first six months of 2014 had been generally positive, with new sales records set.

“Online Gaming continues to grow faster than the market and Yggdrasil has signed a number of new contracts,” the report notes.

EuroLotto.com was migrated to Cherry’s platform and the offer has been supplemented by a large number of new games, which resulted in an increased customer intake, contributing to substantial growth of 38 percent within the Online Gaming business area.

However, management warned that continued strong marketing investment and bonus expenses related to customer acquisition have “burdened” the result, although with increasing volumes the margins will continue to improve.

Yggdrasil products are now available on 15 different online casinos with six different operators, and growth is expected to continue.

Events after the end of the reporting period include:

* The Swedish Sports Alliance has received a license for the new lottery “Klubblo”, which will be released in Q3.

* Yggdrasil Gaming went live with major operators Unibet and MrGreen.