Tipp24 hit by 90% profit collapse
Net profit slumps for second consecutive quarter on the back of "higher than anticipated" costs
London-listed lottery operator Tipp24 has revised its EBIT forecast for 2014 after recording a second consecutive major slump in net profit.
Net profit for the three months ended 30 June 2014 fell by more than 90% year-on-year to 1.5m and comes on the back of a similar slump in the previous quarter, during which profit fell by 98.5%.
As a result, the operator has reduced its EBIT forecast for the year to 15m-25m, having previously remained confident of achieving EBIT of up to 35m, a revision CEO Dr Hans Cornehl attributed to “higher than anticipated” operating costs.
Revenue in the first half of the year fell 10% to 68.2m however EBIT slipped by more than 72% year-on-year to 6m after the operator more than doubled its head count to 278.
This caused personnel costs to leap by 61% in H1 to 9m, while other operating expenses increased by 14% year-on-year to 54.4m.
The largest increase to operating expenditure came from the firm’s marketing efforts which more than doubled throughout the period to 6.3m.
Despite the disappointing results, Cornehl backed the firm to realise its potential on the back of investments into new businesses and verticals.
“Even against the backdrop of a seasonally slower business in the first half of the year and time delays in the ramp-up of new business fields, we remain confident to achieve our growth targets for 2014,” he said.
The firm had previously outlined a strategy to launch additional products in the US and UK, however plans to enter the soon-to-be-regulated Dutch gaming market have suffered a setback after the Dutch government revealed it will ban the entry of foreign lottery operators to the country until 2017.