Argentine Peso rates continue to impact Codere in Q1

14 May 2019

Codere has again cited the devaluation of the Argentine Peso as the main reason behind a year-on-year decline in revenue during the first quarter, despite seeing growth across its Mexican, Italian, Spanish and online operations.

Operating revenue in the three months to March 31, 2019 amounted to €357.7m (£310.6m/$402.1m), down 6.7% on the €383.3m of the first quarter of 2018.

As was the case with its full-year results for 2018, Codere said the drop in value of the Argentine Peso pushed overall revenue down. Revenue in Argentina slipped 34.2% from €122.7m to €80.7m as a result but, on a constant currency basis, this would have been up 20.6% year-on-year.

Madrid-listed Codere also noted a decline in revenue in Panama, Uruguay and Colombia, but Mexican revenue was up 9.3% year-on-year to €83.5m. The operator also saw growth in Spain, with revenue up 8.2% to €48.6m, while Italian revenue rose 1.3% to €86.5m.

Online revenue also rocketed by 69.3% year-on-year from €8.8m in the first three months of 2018 to €14.9m in the same period this year.

Codere was able to partially offset the drop in revenue by cutting its operating expenses by 7.3% from €293.3m to €271.8m. This was primarily achieved by cutting personnel costs by 10.8% to €127.0m.

Rental expenses climbed 22.2% to €8.7m and costs of goods sold were up 5.2% to €12.8m, but other costs were down 4.8% to €62.4m. There was also a 10.8% drop in gaming and other taxes from €142.4m to €127.0m.

However, despite efforts to reduce spending in Q1, Codere reported a net loss of €3.6m, an increase of 32.1% on the €2.7m last year. Earnings before corporate income taxes also slipped from €11.8m to €6.5m.

Codere posted an operating profit pre-inflation accounting of €41.1m, up 8.2% on €38.0m last year, but with the inclusion of inflation accounting, this figure was down 0.2% to €37.9m. Adjusted earnings before interest, tax, depreciation and amortisation increased marginally to €68.0m.

Reflecting on the results, Codere said in a statement that it is now benefitting from a more balanced geographic portfolio, due to growth in Mexico, Spain and online.

Codere also highlighted the recent decision to reorganise its management structure and said this will help the operator realise and achieve its regional targets.

The new structure splits operational and regional leadership into two sections, with officials reporting to group CEO Vicente Di Loreto.

Carlos Villaseca will continue as chief operations officer for retail, with Moshe Edree to serve in the same role for digital. Serafín Gómez will oversee security and compliance functions.

Codere has also set out three specific regional roles, with Alejandro Pascual to serve as regional manager for the operator in Europe, Rodrigo González in Mexico and Bernardo Chena in Latin America, with the exception of Mexico.

The group’s existing country managers for Argentina, Colombia, Panama and Uruguay will remain in place, reporting to the new regional managers.

Meanwhile, Codere has also extended its commercial partnership with Spanish LaLiga football club Real Madrid. Codere will retain its role as the team's official betting partner.

Image: Diego Torres Silvestre