November 16, 2007

Bwin cuts losses but markets respond negatively

Bwin’s results for the third quarter and nine month periods of 2007 were badly received yesterday by analysts across Europe.

Although the company reduced losses to €5m for the three month period to the end of September, compared with losses of €22.6m over the same period in 2006, according to Bloomberg, analyst Christine Reitsamer from Sal. Oppenheim issued a neutral rating and said: “Bwin doesn't seem to be able to show profitable growth. Investors don't like that.'' Wolfgang Matejka, chief investment officer at Meinl Bank in Vienna, told the news agency: ``Bwin has not made the profit some people were waiting for.''

However, Bwin co-chief executive Norbert Teufelberger remained optimistic about the European market. He said: "Who would have thought six months ago that France would move politically? There is movement now. We hope that we will have more clarity in a few months. There won't be a European Union-wide solution, but in individual countries. The UK already has a solution. Our goal is to find one in one or several major countries. If that's going to happen, there will be a landslide."

The company generated gross gaming revenues of €86.2m for the quarter, up 20% on the €71.8m produced in 2006, sports betting revenues rose 15.3% to €47.3m, compared with €41m in 2006 and sports betting margins were 8.5%. Total group revenues for the quarter were €90m, a 34% rise on €67.3m for the same period in 2006. EBITDA for the quarter was €15.2m, compared with a loss of €5.2m in 2006.

Gross gaming revenues for the nine month period were €248m, a 20% increase compared with €206.7m for the same period in 2006. Total group revenues for the period were €252.7m, a 34.5% on €188m in 2006. EBITDA for the nine month period was €49.7m., compared with a loss of €8m last year.

Quarterly net gaming revenues came in at €75.5m, a 22% increase compared with €62m in 2006 and 13.8% rise compared with the previous quarter. Bwin said this was due mainly to an increase in net gaming revenues from poker to €18.5m, a 51% rise compared with 2006 and for sports betting to €40.5m, up 17.2% compared with the same period for 2006.

Bwin’s poker, casino and games divisions all strong performances during the quarter, rising respectively 46.2% (€20.7m), 4.9% (€14.4m) and 32.5% (€4m), while sports betting margins were up on the second quarter of 2007 (7.5%), but down on last year’s figures (9.2%).

Marketing expenses for the quarter were down 44% to €29m, compared with €52m in 2006, the company said it had concentrated on customer acquisition marketing and account reactivations during the period and bonuses totalling €8.5m, 10% of gross gaming revenues, were issued to customers.