November 21, 2008

Bwin enters partnership with French media group; focus on pure growth for 2009

Bwin has entered into a joint venture agreement with the French media company Amaury Group in anticipation of the controlled opening of the French online betting market next year, Bwin revealed this morning as it published its third quarter trading update.

Amaury Group publications include the daily sports paper L’Equipe, newspaper Le Parisien as well as France Football magazine and the cycling publication VĂ©lo Magazine.

Its offshoot Amaury Sport Organisation (ASO) organises sporting events such the Tour de France, the world’s most popular cycling race, the Paris-Dakar rally and the Paris Marathon.

Bwin will offer the brands in the Amaury Group its full range of online gaming products allowed by French legislation and services including payment, security and customer retention management.

Bwin said third quarter trading had been affected by the seasonal drop in activity in the sporting calendar but that the first weeks of fourth quarter trading had already shown a rise in betting activity as the sporting seasons got under way across Europe.

The company said it expected significant improvement in results in 2009, with gross gaming revenues reaching between €430m and €445m and adjusted earnings before interest, tax, debt and amortisation (EBITDA) of at least €100m, thanks to a reduction in operating and marketing expenses.

On the sports front, Bwin said the growing popularity of its live betting segment was shifting the turnover ratio from conventional sports betting to live betting, this resulted in lower sports betting margins for the company. With results being favourable to punters during the quarter, this meant a one percentage point drop in margins, or €6.9m below expectations. Bwin set future range for margins at between 7% and 9%.

Bwin’s poker network business was growing market share, the company said, but its own brands PokerRoom and EuroPoker had performed below expectations and the various different poker labels in the Ongame-Bwin network will be bundled into Bwin Poker during the first quarter of 2009 to benefit from the Bwin brand and improved cost efficiency.

Bwin said it expected significant improvements in results in 2009 thanks to its investment in technology, marketing and brand building. It will now enter a phase of consolidation and cost-cutting to achieve the 2009 results it has set itself. The cost cutting will reach €40m in operating and marketing expenses during 2009 and the company will focus on growing its existing markets while being less aggressive in its expansion strategy to increase cash flow.

Financial highlights revealed third quarter gross gaming revenues were up 11.2% to €95.9 million, compared with €86.2m during the same period in 2007, gross sports betting revenues rose 7.7% to €51m, compared with €47.3m in 2007. Sports betting margins dropped to 7.4%, from 8.5% during the third quarter of 2007.

Quarterly net gaming revenues were up 10.9% to €83.7m, from €75.5m in 2007 and adjusted EBITDA dropped to €9.6m during the period, compared with €15.2m last year. Bwin recorded a quarterly loss after tax €7m, compared with a loss of €5m in 2007.

For the nine month period from January to September, Bwin achieved a record rise in gross gaming revenues of 20.6% to €303m, compared with €251.3m during the same period last year. Gross sports betting revenues were up 26.7% to €170.9m from €134.8m in 2007 and the company enjoyed sports betting margins of 8.0%, compared with 8.4% in 2007.

Nine monthly net gaming revenues were up 18.1% to €263.6m, from €223.2m in 2007, adjusted EBITDA was down €3.7m in 2007 to €46m and the company made after tax losses of €2.7m during the period, compared with a loss of €0.8m over the same period last year.

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