Online growth offset by LatAm declines for Codere in 2019

28 February 2020

Spanish and Latin America-facing gaming operator Codere has reported a 5.9% year-on-year decline in revenue for 2019, after growth in European markets was offset by a currency fluctuations hitting the contribution from its Argentinean business.

Revenue for the 12 months to 31 December 2019 amounted to €1.39bn (£1.19bn/$1.53bn), of which Codere’s LatAm segment accounted for €796.5m, down 12.3% from the prior year.

This, the operator explained, was largely down to the depreciation of the Argentine Peso against the Euro. For that market, revenue fell 22.2% to €317.2m, while the LatAm segment also reported declines in Mexico, Panama and Colombia.

Mexican revenue was down 3.0% to €307.8m, as a result of a more challenging macroeconomic environment, while Panama’s contribution declined 11.9% to €78.2m, which was blamed on a “market slowdown”. Colombia, on the other hand, saw three underperforming casinos closed, which led to an 18.7% drop in revenue to €19.0m.

In the LatAm segment, Uruguay was the only market to report year-on-year growth, with revenue rising to €74.2m.

In Europe, meanwhile, Italian revenue grew 2.0% to €343.3m, boosted by an improved yield on amusement with prizes (AWP) units, and a higher share from machines hosted in bars. Spain also reported an increase in revenue to €189.8m, driven by growth in Codere’s sports betting and route slot businesses.

Finally the online business, which saw revenue grow 34.5% to €59.8m, thanks to increased revenue from Spain and Mexico, even when faced with tough year-on-year comparisons due to the prior year’s Fifa World Cup.

Codere managed to reduce operating costs by 3.5% in 2019, to €1.07bn, due to declines in gaming taxes, personnel costs and other outgoings.

However adjusted earnings before interest, tax, depreciation, amortisation (EBITDA) for the year fell 11.9% to €249.1m. Increases in online, Spanish and Uruguayan earnings were offset by a reduced contribution from Argentina - which fell €23.5m due to the Peso’s devaluation - plus higher gaming taxes in Italy, as well as declines in Mexico and Panama.

After depreciation, amortisation and impairment charges, operating profit stood at €94.3m, down 40.5% year-on-year, which declined to €82.1m (down 41.0%) after inflation adjustments on earnings. Once finance related expenses were factored in, Codere posted a pre-tax loss of €32.8m, while the net loss after tax for 2019 stood at €61.7m, up 31.7%.

This followed the fourth quarter, in which revenue was down 4.7% at €344.0m. The three months to 31 December 2019 saw Codere post declines across the LatAm (down 7.8% to €193.0m) and European (down 1.4% to €136.7m) segments, though a 12.5% increase in online revenue to €14.3m.

Despite a marginal decline in operating expenses, adjusted EBITDA was down 18.3% to €64.7m, and after impairment, depreciation and amortisation, and adjusting for inflation, Q4 operating profit fell 66.6% to €13.0m. Pre-tax profit improved to €0.4m, compared to a €3.2m loss in the prior year, though taxes resulted in a €7.0m loss for the period, compared to an €11.0m profit in Q4 2018.