Unibet CEO defends zero revenue French market
Unibet unveils 30% revenue growth for the second quarter of 2010, but admits it will be a challenge to hit FY earnings targets due to a drop off in revenues from its core French market.
Unibet’s new chief executive has defended his company’s decision not to enter the French market on a B2C basis from day one, despite it facing the prospect of no revenues from its core sports book offering from the territory in the third quarter of 2010.
Admitting that “we won’t have any revenues in France” in the current quarter unless its licence is approved or its partnerships with Zeturf and France Pari went live, Henrik Tjärnström (pictured) said: “Long term, we want to be a credible operator in Europe as we have always been, and that’s why we decided to go for a local licence in France. At the same time, the initial terms and conditions are restrictive, and that’s why we think it’s not comfortable to be in France from day one and why we didn’t want to spend all the money up front to be there. We didn’t see the benefits in a business sense.”
Tjärnström, Unibet’s former group’s chief financial officer and deputy chief, replaced Petter Nylander who resigned as Unibet chief executive on 20 July this year.
The Unibet chief executive was speaking in a presentation to analysts this morning as the group unveiled a 30% year-on-year rise in gross winnings to £39.2m, from £30m, for the three months to the end of June 2010. The company credited the performance of its sportsbook during the World Cup and a 30% year-on year-increase in active customers for the rise. Second quarter pre-tax profit climbed 70% year-on-year to £10m, from £5.9m.
Unibet added that gross winnings for the month of July had been higher year-on-year, despite having to cut French players off from its dot com site in the second quarter in order to enter the licensing process. Tjarnstrom however admitted that having had “two out three months of active customers in France, that number will most likely decrease in Q3.”
The situation in France led Tjärnström to “iterate our guidance from Q1 that it will be a challenge to exceed the EBIT level for 2009 for the full year.” He declined to give a breakdown of the contribution its French market has on its Western European revenues “for competitor reasons.”
Unibet’s B2B offering for Finnish-facing operator PAF remains on track to go live late this year or early next year, said Tjärnström. The newly installed Unibet chief executive also revealed its new Italian sports book would go live during the third or fourth quarter of 2010, and that it intended “to participate [in Denmark] from the very beginning” when that market opens in early 2011, saying the “Danish proposal looks a very workable solution and a very good starting point.”
In response to a question on how the proposed Bwin-Party merger could potentially affect Unibet, he said: “If and when they make that work, it will be a very big competitor, as they would have large scale and could potentially use that in the markets we are more dominant in today. But right now we are not that much in heads-on competition in markets in which they are not present. So not much today, but long term, it can be a major competitor.”
The firm said poker and bingo continued to face “competitive pressures”.