Poor performance from bwin.party in H1-2013

Bwin.Party Digital Entertainment’s latest H1-2013 results make for dismal reading, showing most performance indicators pointing the wrong way as highlighted by these numbers:

* Total revenue down at Euro 342.5 million (H1-2012: Euro 410 million)

* EBITDA down at Euro 60.7 million (H1-2012: Euro 85.6 million)

* Loss after tax at – Euro 11.6 million – less painful than H1-2012’s – Euro 21.3 million loss.

* Sportsbook revenue down at Euro 118.3 million (H1-2012: Euro 128.1 million)

* Casino and games revenues down at Euro 110.8 million (H1-2012: Euro 139.7 million)

* Poker down at Euro 62.3 million (H1-2012: Euro 96.4 million)

* Bingo down at Euro 27.2 million (H1-2012: Euro 31.5 million)

The losses are at least partly due to the company’s focus on value rather than volume and legalised markets only participation, with Management claiming that it has achieved a sustainable revenue base that is a foundation for future growth, with nationally regulated and taxable markets representing approximately half of H1 2013 revenue.

Other highlights flagged by Management include:

* Company set to save Euro 70 million in costs this year, and up to Euro 20 million in 2014

* Online gambling licence application filed with New Jersey regulator, and systems being installed in Borgata Casino ahead of planned launch in November 2013.

* Launch of “all-new version of PartyPoker” imminent.

* EBITDA reflects the impact of a turnover tax on sports betting in Germany, ISP blocking in Belgium and the closure of slots in Spain

* Full year revenue expected to be between 14 percent and 17 percent below that of 2012 with clean EBITDA margins likely to be 2 percent lower than 2012 (excluding revenues and costs associated with a US launch)

CEO Norbert Teufelberger said Friday:

“The first half was always going to be a challenge as we set about optimising the shape and size of our business, with a much greater focus on nationally regulated and to-be-regulated markets.  As predicted, this meant that revenues declined but it also meant that we could make further substantial reductions in our cost base.

“However, our performance and revenue is behind where we expected it to be at this point.  This is partly due to external factors but also due to operational challenges associated with our dotcom migration in December 2012.

“Our move to Agile is starting to produce benefits in terms of productivity, speed of development and implementation.  Over the next twelve months we expect to double the number of software releases whilst continuing to improve product quality and platform stability.”

“Our new partypoker product is ready for launch, firstly into the dotcom environment and then into our core nationally regulated markets. The launch will reposition the partypoker brand ahead of the opening of the US market and revitalise the product, ensuring that it more than meets the expectations of today’s recreational digital consumer.”

Teufelberger revealed that Bwin.Party will be launching a new version of its PartyBingo product before the end of the year and is continuing to press ahead with preparations for the opening of the market in New Jersey.

“Also to come in 2013 is a brand new mobile interface in sports; a new social sports betting app that we have developed with Nordeus; the launch of premium.com, a new service focused on high value customers; and partypoker’s next phase of development when we will introduce additional features for the casual player,” he said.

Reporting on disappointing current trading, Teufelberger said:

“In the eight week period ended 25 August 2013, average net daily revenue was down 8 percent versus the second quarter of 2013 and down 21 percent versus the same period in 2012.

“An improving position in sports betting in August has been hampered by ISP blocking in Greece and a short delay in the launch of our new poker product.  However, we expect to see further benefits from our cost reduction programme to come through by the end of the year and into 2014.”

“We now expect full year revenues, excluding the US, to be between 14 percent and 17 percent lower than 2012 with clean EBITDA margins, again excluding the US, likely to be 2 percent lower than last year.

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