On Tuesday, Spanish media outlet El Confidencial reported that Codere had hired Credit Suisse bankers to conduct a review of its underperforming international operations and decide whether these operations can be salvaged or should be jettisoned to keep them from dragging down the whole enterprise.
Last month, Codere reported its first quarter report card, which showed overall revenue down 6.7% to €357.7m, operating profit essentially flat at €37.9m and a net loss of €3.6m. The company blamed the downturn on €42m worth of unfavorable currency exchange rates in Argentina, the company’s largest market.
Argentine revenue was down 34.2% to €80.7m (but would have risen to €148m in constant currency). Argentina imposed a new 3% tax on slots winnings last December and Codere expects this to cut its 2019 earnings by a little less than €10m. Credit Suisse may also take a dim view of Codere’s other underperforming LatAm markets, including Panama (€19.1m in Q1, -12.3%) and Colombia (€5.5m, -7.3%).
On the positive side, Codere’s Mexican ops improved 9.3% to €83.5m, while Uruguay rose 12.4% to €18.8m. Back in Europe, Spanish revenue rose 8.2% to €48.6m while the Italian-facing business improved 1.3% to €86.5m, although that latter market has also seen some punitive tax hikes on gaming machines and the company recently stated that it was considering all options for its Italian business.
The company’s online operations, which are now broken out as a separate category, reported revenue shooting up 69.3% to €14.9m thanks to gains in Spain and Mexico. In January, Codere shifted its digital HQ to the tax-friendly jurisdiction of Melilla, a Spanish enclave on the shores of Morocco.
Credit Suisse is said to be aiding Codere’s pursuit of a deal to acquire 17 PlayCity-branded gaming venues from Mexican media giant Televisa. But Credit Suisse has reportedly also been tasked with midwifing Codere’s desire to team with HRI on a Mexican resort project. The plan reportedly would see HRI responsible for hotel operations while Codere would handle gaming activity. HRI already operates four venues in Mexico.
Codere’s interest in an HRI Mexican deal may have been boosted by an April court ruling that rejected Codere’s request to open an additional 45 gaming venues in addition to the 95 it already operates in the country.
Codere trotted out a revamped brand identity last month in the form of a new logo that is essentially the logo the company had used for the past four decades with a thicker typeface minus the old ‘clover’ icon. The company’s brand director Angel Fernandez said the clover had to go because it was “associated with a random component that does not correspond” to the company’s new social responsibility goals.
Speaking of out with the old, Codere revealed last week that it will seek to oust the remaining two members of the Martinez Sampedro family from its board of directors at the company’s annual general meeting on July 26. The family presided over the company during its long descent into debt, and the two remaining family members were relieved of their executive roles in January 2018.