How Argentina’s Peso helped Codere to coin in revenues in 2015

How Argentina’s Peso helped Codere to coin in revenues in 2015

Tuesday, March 1, 2016 Totally Gaming
Currency fluctuation and inflation in Argentina had a major impact on Codere last year

Codere said it expects the economic situation in Argentina to continue to affect its performance in 2016 after high inflation and currency appreciation in the South American country boosted its earnings figures last year.

In its results for 2015, the gambling operator announced revenue of €1.6bn ($1.74bn), up 18.3 per cent year-on -year, and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) up 31.4 per cent to €280.1m. Codere also said that efficiencies helped cut net losses by 34.6 per cent to €113m.

With 41 per cent of Codere’s revenue attributed to its Argentine operations, appreciation of the country’s currency, which grew by 4.3 per cent against the Euro in 2015, had a major effect on the company’s performance. The group’s overall revenue in constant currency terms increased by 15.2 per cent to €1.6bn, with EBITDA up 27.3 per cent to €271.4m.

The potential of gambling in Argentina and other Latin America markets will be the focus of Juegos Miami, organised by Clarion Events, later this year, when representatives from Codere will be among those giving their expert opinions on the region.

Argentina was the biggest region of growth for Codere in 2015, with an increase in average daily win per machine (27.4 per cent) and economic conditions helping to boost revenues by 39.4 per cent to €681.8m and EBITDA by 56.4 per cent to €146.1m. The company's activity in Argentina is in the province of Buenos Aires, where it operates slot machines and 14 bingo halls. 

Mexico accounted for 21 per cent of the group’s revenue, and grew by 3.9 per cent to €355.3m in 2015 due to an increase in the number of slot machines and “as a result of the deployment of commercial measures to enhance traffic”. Codere said that despite a favourable exchange rate during the first half of 2015, full year results did not benefit materially from a stronger Mexican Peso, due to its devaluation in the second half of the year.

Italy was another area of expansion, with that market’s revenues increasing by almost eight per cent to €284.2m thanks to the increase in the average daily win per machine, the increase in number of machines installed and increased revenues in the bingo business.

Looking ahead to 2016, Codere said that operating results will be driven in Argetina “by consolidation of the trends in revenue and expenses due to the cost savings initiatives implemented - inflation cost containment” and “deterioration of the macroeconomic scenario in Argentina and changes in the exchange rates, in particular an appreciation of the Euro versus the Peso”. Revenue growth in local currency in Mexico would also be an area of note, it said.

The company identified “further gains from selective investment in product renewal and deployment of sports betting activity [in Spain]” and said that growth could also be impacted by the Stability Law 2016 in Italy. 

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