Online gambling company bwin.party has warned that its full-year turnover could slump by up to 17% as it streamlines the business to focus on markets where it can generate better returns.
In its interim results, the company revealed that its earnings before interest, tax, depreciation and amortisation (EBITDA) fell year-on-year by a third to €60.7 million ($80.3 million) while total revenue dropped by 16% from €410 million to €342.5 million in the six months to the end of June.
Sales dipped across all divisions, with sportsbetting dropping from €128.1 million to €118.3 million, poker falling from €96.4 million to €62.3 million, bingo dropping from €31.5 million to €27.2 million, and the casino and games division falling from €139.7 million to €110.8 million.
Full-year revenue is expected to be between 14% and 17% below the 2012 figure, while EBITDA margins are likely to be 2% lower than last year.
However, the company said that it is on course to deliver at least €70 million of cost savings in the current year versus 2012 and up to €20m of additional savings in 2014, when the launch of new products, improving productivity and lower costs will allow bwin.party to be well-positioned to return to growth.
“The first half was always going to be a challenge as we set about optimising the shape and size of our business, with a much greater focus on nationally regulated and to-be-regulated markets,” Chief Executive Officer Norbert Teufelberger said.
“As predicted, this meant that revenues declined but it also meant that we could make further substantial reductions in our cost base. However, our performance and revenue is behind where we expected it to be at this point.
“This is partly due to external factors but also due to operational challenges associated with our dotcom migration in December 2012.”
Increased competition in the bingo sector in Britain and Italy as well as the introduction of a turnover tax on sportsbetting in Germany had an impact on bwin.party’s results. The company also said that Greek internet service providers had unexpectedly started blocking gambling websites, further stifling growth.