* Sees 2013 revenue 14-17 pct below 2012 levels
* H1 EBITDA down 34 pct to 60.7 mln euros
* Underlying revenue in 8 weeks to Aug. 25 down 21 pct
* Shares down 13.6 pct to a seven-month low
By Rhys Jones
LONDON, Aug 30 Online gambling company
bwin.party warned that full-year revenue would fall by
up to 17 percent as it shrinks the business to focus on fewer
markets where it can make higher returns.
The company, formed by the 2011 merger of PartyGaming and
Bwin Interactive Entertainment, is focusing on regulated markets
and is also preparing to expand in the United States as markets
open up there.
The strategy, which sacrifices short-term revenue in an
attempt to produce a more stable business model, is similar to
one being followed by betting exchange operator Betfair
Bwin.party, which offers sports betting and online games,
is focusing on fewer, higher-paying customers to increase its
average yield per player. That metric rose 7 percent to 9.6
euros ($12.7) in the first half of the year. The company did not
give a long-term yield target.
However, as a result of the new strategy, Bwin.party, which
has cut investment in 18 non-core markets including Brazil and
Cyprus, expects full-year revenue to be between 14 percent and
17 percent below the 801.6 million euros reported last year.
The earnings before interest, tax and depreciation (EBITDA)
margin will likely be 2 percentage points lower than last year's
20.6 percent, the company said.
Bwin.party said first-half EBITDA fell 34 percent to 60.7
million euros and that like-for-like revenue in the eight weeks
to Aug. 25 fell by a fifth.
Shares in the group were 14.6 percent lower at 108.7 pence,
their lowest level for seven months, valuing the business at
around 920 million pounds.
"These forecast downgrades reflect the unpredictability of a
business in transition, and of regulatory action," said Numis
analyst Ivor Jones, who retains a "buy" recommendation on the
stock reflecting potential growth from new products and U.S.
Bwin.party's recent trade has been hit by the introduction
last year of a turnover tax on sports betting in Germany, its
largest market, and competition in the bingo sector in Britain
and Italy. It also suffered after Greek internet service
providers unexpectedly started blocking gambling websites.
"This was always going to be a major year of transition for
us...however, our performance and revenue is behind where we
expected it to be at this point," Chief Executive Norbert
Teufelberger told reporters.
The company, which plans to roll out a new version of its
popular partypoker game in the coming months, said its systems
were being installed ahead of an expected launch of poker and
casino games in the U.S. state of New Jersey in November.
The third quarter should represent "the nadir of the
group's fortunes" according to Peel Hunt analyst Nick Batram,
who expects Bwin.party to report 2013 EBITDA of around 126
million euros on revenues around 677 million euros.
The company, which hopes to cut 70 million euros of costs
this year, increased the half-year dividend by 5 percent to 1.80
pence per share, reflecting its confidence on new products, the
2014 soccer World Cup and the prospect of U.S. expansion.