Bwin.party mulls external investment as profits continue to fall
CEO Norbert Teufelberger says a "more fundamental approach" is needed as EBITDA tumbles 24%
Bwin.party is considering external investment opportunities and spinning-off its US business after announcing yet another fall in KPIs, with H1 revenues and profits tumbling 7% and 24% respectively.
Total revenue for the first six months of the year was down from 342.5m to 317.1m, which the operator attributed to a soft online poker market and the loss of 11.9m following its withdrawal from Greece as part of its focus on a ‘volume to value’ strategy.
Clean EBITDA fell from 60.7m in H1 2013 to 46.4m, which bwin.party said was due to the closure of its Greek business and a 7.3m loss from its New Jersey operations, despite having claimed a market leading 36% share of the state’s poker market with land-based partner the Borgata.
Bwin.party’s volume to value strategy saw its percentage of revenues derived from regulated or taxed markets increase from 52% to 56%, helped by a positive performance from its sportsbook and casino verticals, which saw revenues increase 14% and 7% respectively to 89.1m and 27.6m.
Poker revenues, including those from unregulated markets, were down 31% to 44.1m while bingo revenues dipped slightly to 26.7m. The decline in poker comes after last year’s re-launch of its PartyPoker platform and resulted in the operator reducing the value of its poker business with a non-cash impairment charge of 94m.
Bwin.party said it was on track to deliver 30m of cost savings during 2014 with 13.8m of savings achieved during H1. The operator also highlighted a further 15m of savings to be made in 2015, some of which to be made via a reorganisation of its senior management team.
“We are on-track with our current cost saving measures, however it is clear that a more fundamental approach is needed to turnaround our commercial and operational performance,” CEO Norbert Teufelberger said.
“This new approach will also allow us to consider alternative financing and corporate structures in order to create additional value. We are confident that the steps we are taking will underpin our financial performance and remain confident about the full year outlook,” he added.
Non-executive chairman Philip Yea said bwin.party may yet consider breaking up the business and spinning off its US operations.
“The US is a very good example,” said Yea. “We’ve set the US up with its own technology platform. This is a business that, in due course, with the market opportunities it has, may benefit from having additional capital brought into it. So that’s the kind of thing we’re talking about,” he added.
In the first eight weeks of the year to 25 August average daily poker revenues fell 32% year on year to 177,500, with casino down 3% at 541,300, while bingo remained flat at 133,999. Sportsbook was up 8% on the same period last year at 580,300.
The operator’s share rose 2.8p to 82.95p after early morning trading.