pe html> Novomatic's Revenue Declines 1.8% in the First Half of Fiscal Year

Novomatic Suffers H1 Revenue Blow Due to Regulatory Changes in Italy and

September 3, 2019 Andrej Vidovic

Austria-based Novomatic, one of the global leaders in the iGaming industry, has published a report that reveals a 1.8% slump in revenue on annual basis for the first half of the financial year. The company cites the change of regulatory environment in and Italy as the main causes for this.

The period of January 1st – June 30th saw a total revenue of €1.26 billion. Radical changes in have impacted the company negatively, as this country is their largest and most important market.

The Cause and the Effect

Novomatic has sold or rented 11,500 terminals less in …

…as their rental portfolio fell to 154,00 devices. As a result, revenue in Central Europe’s biggest country fell 6.2% year on year (to €338.1m). is in the middle of applying their third amended State Treaty on Gaming and new technical regulations are being mulled.

Meanwhile, in Italy…

…there were tax rates changes for gaming machines doing their negative impact. On top of that, the gambling advertising ban also had an effect on revenue, while revenue contribution also took a nosedive for a total of €181.8m.

FOBTs Do Not Impact Everyone Negatively

The brand’s subsidiary, Ainsworth Game Technology’s period wasn’t all that better…

…because difficult conditions in South America and Australia impacted this particular brand in a negative way. However, there was a possibly surprising effect in the UK that took a turn for the better, where cutting down of fixed-odds betting terminal stakes benefited Novomatic’s gaming hall business.

This resulted in UK growth – a feat replied in Spain, Netherlands and native Austria.

Similar Trend All Over

The revenue that was derived from development, production, leasing and sale of gaming devices, content and technology fell to €469.4m, which is a decline of 2.2%. Revenue in gaming operations…

…which also includes self-operated slot arcades, casinos an sports betting outlets in addition to bingo halls also fell 1.5% to €794.3m.

The next steps for Novomatic is to reduce costs as much as possible and to raise business efficiency while disposing of failing assets. By this, they mean subsidiaries in Croatia, OTIUM Group in Latin America and Spain.

Future Steps

In the second half of 2019…

…the brand will sell Gaming Technology Group (UK-facing tech division) to Inspired Entertainment for $120 million. They will have to meet all the regulatory requirements first.

They will also work on numerous small businesses acquired in Eastern Europe.

Material and operating expense costs have fell to €172.8 million and €349.7 million respectively. This has offset the personnel expenses rise at 1.4%.

Earning before interest, depreciation, tax and amortisation fell 5.1%, but impairment charges for these have rose €249.6m, which is a yearly increase of 61.2%. Operating profit fell 70% to €47.5m, while finance-related costs and income tax of €15.2m.

This particular figure was improved by a €19.5m profit that stems from discontinued operations. This resulted in a net profit of €34.3m, which is a big 68.6% drop from 2018’s first half.

Source:

“Regulatory development hit Novomatic revenue in H1”, igamingbusiness.com, September 2, 2019.