Spain – Codere reports solid results despite currency woesBy Phil - 30 May 2019
Codere has reported that it closed the first quarter of the year with a net loss of €3.6m, compared to a loss of €2.7m last year while its operating revenues fell 6.7 per cent to €357.7m, compared to the €383.3m of the first quarter of 2018.
The results were negatively impacted by the depreciation of some currencies, especially the Argentine peso. The company in its presentation for the latest quarterly results, however, showed that it was making significant headway thanks to its performance in countries such as Mexico and Spain and the growing contribution of the online sector of its business. Indeed online revenue increased by as much as by 69.3 per cent year-on-year from €8.8m in the first three months of 2018 to €14.9m.
The company achieved an adjusted EBITDA before interest, tax, depreciation and amortisation of €68m in the period, in line with the same quarter of 2018; driven by significant growth in Mexico and Spain, and despite the sharp depreciation of the Argentine peso and the rise in gambling taxes in both Argentina and Italy.
The company obtained operating income of €357.7m, 6.7per cent less than in the same period in the previous year due to a decrease of €42m in Argentina due to the depreciation of the peso against the euro, which was compensated in a significant part thanks to the positive evolution in Mexico (+€7.1m), online activity (+€6.1 m) and Spain (+€3.7m).
Operating expenses in this quarter decreased by 7.3 per cent to €271.8 m, mainly as a consequence of the reduction of costs in Argentina, due to the devaluation of its currency. Non-recurring expenses stood at €3m, significantly below the €11.9 m recorded in the first quarter of 2018.
In Mexico, the revenues of the first months of the year increased by 9.3 per cent, compared to the first quarter of 2018, driven by the 10.3 per cent growth in the average number of machines and the favorable trend of the exchange rate (5.4 per cent depreciation of the euro against the Mexican peso).
In Spain, operating income in the first quarter of 2019 grew by €3.7m (8.2per cent) compared to the first quarter of 2018, driven by the increased income in physical sports betting shops and in the business of machines in bars, with 26.1 per cent and 6.8 per cent more units installed.
The director general of Codere, Vicente Di Loreto highlighted the improvements when it came to the improved operational efficiency of the company:
“The data reflects, once again, the impact of the operational and efficiency improvements implemented, and the strength of the company in a severe environment in terms of tax increases, especially in Argentina and Italy, and the devaluation of Latin American currencies,” he said.
In terms of installed capacity, machine positions grew by 0.3 per cent, reaching 56,764 units. In addition, the number of gambling halls remained unchanged at 148; while sports betting venues went from 443 to 478 and the number of machines in bars remained stable.
In February Codere reported losses of €40.4m in 2018 compared to 2017’s profits of €2.8m registered in 2017. Operating revenues fell 9.9 per cent last year to €1,476m, which the company attributed to lower yields in markets such as Argentina and Mexico, while operating expenses (excluding depreciation and amortisation) decreased by 12.5 per cent to €1,193m.