Codere cuts losses despite Argentine peso decline

13 September 2019

Codere’s saw its net loss for the second quarter of 2019 fall by more than 75% for Q2, despite the collapse in valuee of the Argentine Peso drastically hurting revenue in what was previously the operator's largest market.

Overall operating income for the company in the quarter totalled €354.7m, down 5.7% from the previous year. Revenue grew across a number of key regions, such as Mexico (up 5.3% to €84.2m), Italy (up 4.5% to €85.1m) and Spain (up 2.6% to €47.5m). However, revenue from Argentina fell 27.2% to €80m.

The fall in revenue from Argentina was largely due to a sharp decline in the value of the Argentine Peso in August, driven by a primary election result that projected a victory in the October general election for Peronist opposition candidate Alberto Fernández, against the more market-friendly incumbent Mauricio Macri. On 8 August, a US Dollar bought AR$44.80, while on August 14th, the price had increased to AR$60.24.

Revenue from online gaming also increased by 31.1% to €14.9m, while revenue from Panama declined 15.2% to €19.2m and fell 6.3% to €5.3m in Uruguay.

However, the company’s bottom line benefitted from a 7.8% decrease in operating expenses to €266.7m. The amount paid out in gambling taxes declined 8.8% to €123.7m, while personnel expenses fell 12.3% to €61.9m. Consumption and other expenses also decreased over the quarter.

Depreciation and amortisation costs for the company increased by 12.3% to €42.7m, bringing the company’soperating profit to €36.9m, up 5.5% from last year, and post-inflation operating profit to €36.2m, up 3.7% from the prior year.

Financial losses increased 4.1% to €30.1m, while taxes came to €11.9m, leading to a total loss of €4.8m, down 86.7% from last year.

For the first half of 2019, operating income declined 6.2% to €712.4m, thanks mostly to a 30.9% decline in revenue from Argentina to €160.7m, while revenue in Mexico, Italy, Uruguay and Spain all increased.

Due to the fall in revenue in Argentina, Italy became the largest market for Codere for the year to date, bringing in €171.6m.

Total operating expenses fell 7.6% to €538.5m. Gambling tax bills for the company declined 9.8% to €250.7m, while personnel expenses fell 10.1% to €122.8m. Depreciation and amortisation costs increased 8.3% to €83.7m, leading to an operating profit of €77.9m, up 7% from last year, while post-inflation operating profit increased 1.7% to €74m.

Financial costs declined slightly to €58.9m, while taxes totalled €22.2m for a total loss of €8.5m, down 78% from last year.