Operator News

Spain – Codere makes gains online but records net loss

By Phil - 18 November 2019

Codere has released its nine month report reporting an increase in net loss as it continues to suffer from the economic crisis in Argentina.

Other challenges facing the company are new taxes in Argentina, and Italy. However it reported solid gains in its online operations in, Spain, Italy and Uruguay. Its online sector is evolving in line with expectations, “delivering revenue and adjusted EBITDA growth with prudent levels of marketing investments,” the company said.

Operating Revenue decreased by €70.3m or 6.3 per cent to €1,045.3m in 9M 2019, due to the decrease in revenues in Argentina (€83.6m), Panama (€7.8m), Colombia (€3.4m) and Mexico (€3.2m), being partially offset by growth in Online (€13.8m), Italy (€8.0m), Spain (€3.8m) and Uruguay (€3.1m).

Net Loss in the first nine months of 2019 was €54.6m, compared to a Net Loss of €57.8m in the first nine moths of 2018.

In Argentina Operating Revenue in 9M 2019 decreased by €83.6m or 25.7 per cent compared to 9M 2018, due to the significant devaluation of the Peso (67.4 per cent). Gross win per slot per day in local currency grew 24.9 per cent (27.8 per cent including clients’ withholdings), well below year on year average inflation of 54.2 per cent. Revenues were also impacted by the new tax on prizes (3 per cent) effective since February and suspended in September.

Operating Revenue grew though for Spain in 9M 2019 by €3.8m (2.7 per cent) to €142.1m compared to the first nine months of 2018, driven by growing revenues in retail sports betting and its slot route businesses with 18.7 per cent and 4.5 per cent more installed units, respectively, and the progressive maturity of the sports betting capacity installed, offset by a 3.0 per cent decrease in route slot unit yields (mainly driven by the increase in the number of units, especially in arcades).

In Italy Operating Revenue in the first nine months of 2019 increased by €8.0m or 3.3 per cent compared to the first nine months of 2018 as a result of the significant improvement on AWP unit yields (16.6 per cent), as well as the higher PREU tax (that increases the share the company keeps from machines in bars), offsetting the reduction in capacity defined by the regulator in 2018 (8.1 per cent). Increased fees to units connected to its network also contributed positively to maintain its revenue.

Codere also highlighted the significance of policy changes in Mexico. President Andres Manuel Lopez Obrador has publically come out against the granting of new casino licenses during his six year term as president in Mexico (until 2024). The company said however that while the decision may affect new licenses, it does not prevent it from using already existing ones (35 + unused licenses) “or continue acquiring halls from small and medium sized operators.”

The company also cleared up the inconsistencies found in its accounting in October for its results for its Latin American subsidiaries. According to the latest reports these inconsistencies had been found after The Board of Directors appointed unaffiliated firms to perform an independent investigation. The company nor the independent third party investigation had found any evidence of inappropriate usage or loss of cash.

Codere is a leading international private gaming operator with over 57,130 slot machines, 29,537 bingo seats and 7,659 sports betting terminals in Latin America, Spain and Italy, across various gaming venues, including 148 gaming halls, 1,119 arcades, close to 10,000 bars, 602 sports betting shops and 4 horse racetracks.