Betsson cites "challenging" Q2 as profits slump
Operator's share price falls by more than 20% following difficult April and May and unfavourable FX movements
Betsson AB today said a disappointing sportsbook performance and unfavourable exchange rate fluctuations would see the operator post Q2 revenues in the region of SEK920m (?81m) and SEK945m (?83m) and profits fall by around 25%, news which caused its share price to plummet this morning.
While the revenue expectation would trump the SEK861m (?75.75m) posted in Q2 last year, this year’s total will also include the July acquisition of Europe-Bet, which in Q1 contributed SEK93.9m (?8.2m) in revenues.
The firm pointed to “lower than expected” sportsbook revenues of between SEK205m (?18m) and SEK230m (?20.2m) for the period, compared with SEK206.4m (?18.1m) in Q2 2015, following withdrawals from a number of markets and tough trading months of April and May, particularly in one specific unnamed market.
“Betsson has closed a number of European markets during the past 12 months, as a consequence of a more conservative stance on what markets to accept players from,” a statement read. “The restrictions are also an effect of changes in the regulatory landscape and unclear tax regulation.”
In addition, exchange rate fluctuations are thought to have impacted revenues by around SEK30m (?2.6m) and, as a consequence, operating profit (EBIT) is expected to be between SEK140m (?12.3m) and SEK175m (?15.4m) for the period, significantly down on last year’s total of SEK213.8m (?18.8m).
Ulrik Bengtsson, Betsson AB president and CEO, said while the firm had experienced a tough couple of months, the Euro 2016 tournament had provided a more positive end to the quarter.
“April and May were challenging months for us in terms of sportsbook margin, but June looks better and activity is in line with expectations,” Bengtsson said. “The strong inflow of new customers during the UEFA Euro 2016 will benefit us going forward.
“Betsson’s ambition to increase the share of revenue from locally regulated markets and continue to grow our business long-term, organically and through acquisitions, remains,” he added.
The firm will publish its full Q2 results on 21 July.
Betsson AB’s share price dropped by 22% to SEK72.0 at the time of writing.