BUSINESS

Betsson shares lose one-third of their value following Q2 profit warning

TAGs: Betsson, kroon casino, Netherlands

Swedish online gambling operator Betsson AB has seen its share price fall by one-third this week, during which the company issued a trading update that warned of lower profits.

Betsson shares lose one-third of their value following Q2 profit warningBetsson’s update said it expects revenue in the three months ending June 30 to come in between SEK 920m-945m (US $108m-111m), while operating profit would range from SEK 140m-175m. The profit figure would represent about a 25% haircut from Q2 2015’s number. Final numbers will be issued July 21.

Sportsbook revenue is expected to come in between SEK 205m-230m compared to SEK 206.4m in the same period last year. While seemingly positive, this quarter’s figures include contributions from the Georgian-facing Europe-Bet operations that Betsson acquired last July, and which contributed SEK 94m to its Q1 revenue total.

Betsson says the lower sports revenue is attributable to lower turnover in “multiple” markets, losses in an unnamed “strategic” market and the company’s exit from “a number of European markets” over the past year, based on Betsson adopting “a more conservative stance” on which markets it wishes to serve.

As if that wasn’t enough, Betsson says it suffered a negative impact of around SEK 30m in Q2 from unfavorable exchange rate fluctuations, which come directly off the company’s bottom line.

On the plus side, Betsson CEO Ulrik Bengtsson says June’s sportsbook margins were more in line with expectations than the “challenging” months of April and May. Bengtsson also expects to reap future benefits from the “strong inflow of new customers” during the Euro 2016 football tourney.

In other Betsson news, the company recently awarded its international advertising strategy and creative account to London-based agency Leo Burnett following a competitive pitch process. The agency has been tasked with delivering a global creative platform for Betsson, focusing on markets like Sweden, Norway, Finland, Germany, Brazil, Peru and the Netherlands.

Speaking of Holland, Betsson’s Dutch-facing subsidiary Kroon Casino has signed a two-year sponsorship deal with the Nederlandse IJshockey Bond aka the Dutch Hockey Association. However, the deal is contingent on Netherlands legislators making good on their promise to pass the country’s long-awaited Remote Gaming Bill, discussion of which continues this week.

Betsson’s Bengtsson said the tie-up with Dutch hockey was a natural, given the prominence of hockey in Betsson’s home market. Bengtsson also said the decision was made to use the Kroon brand because it was well familiar with Dutch punters and Bengtsson hinted that future Dutch sponsorships would likely involve Kroon and Betsson’s other local brand Oranje Casino.

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