Core profits lower than anticipated at Fortuna Entertainment

The Czech online and land gambling group Fortuna Entertainment has posted its FY-2016 results, recording lower core profit than expected, which Management attributed to rising operating costs.

Key performance indicators flagged were:

* Net profit fell 42.4 percent to Euro 11.2 million;

* EBITDA declined 18.5 percent in 2016 to Euro 22.1 million – a steeper decline than the maximum 15 percent expected, but Management predicts this will rise by up to 25 percent in 2017;

* Amounts staked in 2016 were better than forecast at Euro 1.04 billion – up y-o-y by 22.6 percent;

* Fortuna plans to sell its Czech lottery business in Q2-2017;

* The directors have decided against paying a dividend due to investments priorities.

The directors said that the group, which operates in the Czech, Slovak and Polish markets, had incurred impairment charges of Euro 1.9 million euros regarding the planned sale of the company’s Czech lottery asset.

CEO Per Widerstrom said that EBITDA had been adversely impacted by tax increases imposed by the Czech government, unfavourable sports results in 2016 and a planned increase in operating costs to support growth opportunities.

He predicted that online betting would drive growth in 2017 and that Fortuna will introduce new online games in the Czech Republic. However, the absence of major soccer events will likely weigh on group performance.

Widerstrom said he was confident that total bets could grow to Euro 1.3 billion in 2017 while core profit EBITDA could rise by 20-25 percent…but warned that investments into a new enhanced sports betting and gaming platform, data warehouse and a front-end system will push investment spending to between Euro 8 million to 10 million.

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