UPDATE 2-Bwin.party warns on revenue as it bets on new markets

Fri Mar 15, 2013 8:11am EDT

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* 2012 EBITDA 164.9 mln euros vs 199.3 mln euros

* Revenue 801.6 mln euros vs 816 mln euros

* Total dividend up 10 pct to 3.44 pence/share

* Sees 2013 revenue slightly lower than market estimates

By Rhys Jones

LONDON, March 15 (Reuters) - Online gambling firm bwin.party warned 2013 revenues would fall below market expectations as it changes its focus to fewer, more regulated markets, fuelling concerns over whether its new strategy would pay off.

Shares in the world's largest listed online gaming group slid nearly 7 percent on Friday, trimming a 33-percent gain in the last three months as analysts grew anxious about the short-term impact on earnings after a 17 percent fall in 2012 earnings.

Shares in bwin.party, which specialises in online poker and casino style games, had soared in recent months on hopes other American states could follow New Jersey's lead to liberalise their gambling laws, opening new opportunities for gambling companies on both sides of the Atlantic.

"Our transition to focus on fewer markets and reduce the complexity and scale of the business has hit our short-term targets but we think we are on the right path for the long-term," chief executive Norbert Teufelberger told reporters.

The company, formed by the 2011 merger of PartyGaming and Bwin Interactive Entertainment, wants to make its business less volatile by reducing its reliance on smaller, unregulated markets and shifting to areas where gambling rules are clearly defined.

As a result of this restructuring, it expects 2013 revenue to be slightly lower than current market estimates, but it added that the impact on profits would be offset by cost savings and higher margins.

"The change to a more focused approach on a smaller number of commercially attractive markets is undoubtedly the way to go ... but is not without its risks; failure to execute perfectly could lead to painful earnings revisions," said Davy analyst David Jenning.

Bwin.party reported 2012 earnings before interest, taxes, depreciation, and amortisation (EBITDA) of 164.9 million euros ($214 million), in line with analyst forecasts but down from 199.3 million euros a year earlier.

The introduction of a 5 percent turnover tax on sports betting in Germany last July held back growth in sports betting revenues as short-priced odds - bets where customers will not receive a large return for their investment - became unprofitable.

Overall revenues fell 2 percent to 801.6 million euros, with sports betting and casino revenues largely flat but poker and bingo revenues hit by continued pressure on consumer spending, particularly in parts of southern Europe.

NEW BETS IN US

Bwin.party did not say which markets it would pull out of, and whether it would follow online betting exchange Betfair which recently said it would quit Greece because of problems over licences and punitive tax rates.

But it plans to throw more resources this year to markets that are expected to be regulated, especially the United States, it said.

New Jersey Governor Chris Christie signed legislation last month that opens the door to online gambling being legalised in the state. Shares in gaming companies have surged on hopes the U.S. liberalisation would unlock a market analysts believe is worth up to $1 billion.

"We're gearing up for a launch in the U.S. which now seems to be a more likely prospect within the next twelve months," said Teufelberger, who added that the group had ring-fenced infrastructure to enable a swift U.S. launch.

Bwin.party said current trading had been impacted by its increased investment in nationally regulated markets, such as France, Italy, Germany and Spain, and by its move to a single technology platform.

The company is expected to post average 2013 revenues of 815 million euros, according to Thomson Reuters data

Shares were down 6.7 percent at 141.2 pence at 1144 GMT, valuing the group at around 1 billion pounds.

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