World Cup distraction pauses 888 dividend

888 Holdings, which earlier this month warned that its results may be disappointing has had to scrap its interim dividend after the distractions of the football World Cup in June-July this year, together with a traditionally slow seasonal decline and the general economic malaise, impacted profits.
Pre-tax company profits plunged 44 percent to $8.4 million (GBP5.4 million) for the first half of the year, the company revealed in a statement this week.
First half revenues reached $130 million, 10.5 percent up on the same period last year, but marketing costs escalated by 19 percent to $47.5 million resulting in a 39 percent drop in H1 EBITDA to $12.6 million.
Results by operational activity showed that online bingo generated $23.5 million in H1 revenues, whilst online poker again presented a lack lustre performance, declining to $19.6 million. Online casino operations fared better, rising to $59.3 million from H1 2009’s $55.9 million.
City financial media listed other sectors in the UK economy that felt the pressure of the World Cup including dance studios, home retail groups and entertainment venues like pubs, although sales of televisions and home delivered meals surged.
Some bookies have also reported good business from the Cup – William Hill said the World Cup was “one of the best for bookmakers in 40 years”, as patriotic punters lost money backing England.
888 Management has reacted to the downturn by beginning a cost-cutting initiative to prevent further losses, although CEO Gigi Levy reported that it was not all gloom and doom, with online poker revenues picking up 15 percent as the second half of the year started.
The economies envisaged by management should result in a reduction in overhead of $6 million by the time the second half of the year ends, although the company was not specific about what would be axed or streamlined.
888’s role in consolidation moves sweeping the industry remains unclear, with Levy again referring to the possibility in releasing the H1 results.
“We look at consolidation as one of the possible routes to realising our full value and feel that longer term this is the direction the industry will take. We have always stated that we will look into all relevant deals and expect the recent merger news to accelerate such discussions in the industry,” he reported.
He also warned that the regulated markets in France and Italy should not be viewed as generating overnight success, but as a longer term investment that would take time to deliver the full potential.

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