Novomatic slips to loss despite 2018 revenue growth

26 April 2019

Gambling technology giant Novomatic has posted an operating loss of €131.9m (£113.9m/$147.0m) for 2018 as higher costs offset a 10.5% year-on-year rise in revenue.

Revenue before gaming taxes and betting fees for the 12 months to December 31, 2018, amounted to €2.61bn, up from €2.37bn in the previous year.

Novomatic put this down to growth across core European markets, particularly in Italy and Spain. Sales in Italy increased from €371.7m in 2017 to €401.1m, while Spanish sales jumped 20% from €126.4m to €152.1m.

Germany remains the main source of income for Novomatic, with revenue rising from €722.4m to €724.0m, while Austrian revenue also increased from €335.9m to €373.6m.

The operator and supplier reported year-on-year growth across all European markets, as well as its rest of the world segment, where revenue improved from €77.2m to €219.5m. The technology provider only noted a decline in online sales, which fell from €146.5m to €110.2m.

Overall gaming technology revenue increased from €840.2m to €968.1m, while gaming operations sales climbed from €1.52bn to €1.64bn.

The technology provider was also boosted by the acquisition of a 52.2% stake in Ainsworth Game Technology, which helped bring in an additional €160.5m in revenue.

However, Novomatic also reported an increase in costs across various areas of the business for the year. Cost of material was up by 50.1% to €496.6m, mainly due to the provider’s expanding presence across Germany and Austria.

Personnel costs were up by 10.18% to €776.6m due to the Ainsworth acquisition and increasing business activity, while other operating costs 1.8% to €863.2m for the year. Novomatic also saw depreciation and amortisation, impairment and reversal of impairment costs rocket 101.4% to €687.6m

These higher costs had an impact on earnings, with Novomatic reporting an operating loss of €131.9m, down from a profit of €220.5m in 2018. The provider put this decline down to higher depreciation and amortisation as well as high impairments in 2018.

Earnings before taxes slipped from a positive of €198.9m to a loss of €159.5m, while net result from continuing operations also fell from €97.3m to negative €127.0m. Novomatic’s annual result was a loss of €154.9, down from €61.4m in 2018.

The Novomatic executive board praised the performance in 2018, citing the revenue growth as a major highlight.

“The focus is currently on consolidating the rapid growth of the past few years, which was driven by the purchase of various companies,” the board said. “In parallel, the company is beginning to increase the synergy potential.

“The focus of these efforts is on the transnational optimisation of internal processes and structures.”

Image: Max Pixel