Playtech shares plunge 23 percent following second profit warning
News on 2 Jul 2018
News on 2 Jul 2018
Playtech‘s trading update earlier today (Monday) voicing concerns regarding competition in the Asian market (see previous report) have been interpreted as the group’s second profit warning this year, triggering a 23 percent decline in share price Monday morning on the London exchange.
In early trading, shares were down 23 per cent at 580p.
The bank Credit Suisse estimates that at least 40 percent of Playtech’s profits come from China. In November last year, the Isle-of-Man headquartered company was forced into a profit warning following a crackdown on gambling syndicates in Malaysia, effectively ending access to one of its largest Asian markets.
Playtech said there was “no material improvement” in Malaysia, adding that expected revenue from Asia this year would be Euro 70 million lower than expectations.
The company reported: “Given that the downturn in Asia has been relatively sudden and taking into account Playtech’s centralised cost base, the vast majority of this revenue loss will drop through to adjusted [earnings].”
The company added that it now expected adjusted earnings for 2018 to be between Euro 320 million to Euro 360 million — a result that does not take into account the Euro 222 million Playtech made from selling its stake in online Gambling group GVC last month.
The Financial Times observed that the latest profit warning is likely to put more pressure on chief executive Mor Weizer. In May, the company lost a vote on its pay report, after some shareholders staged a protest against Weizer’s 78 percent pay rise for 2017, despite the November profit warning.
