Playtech profit warning sends shares tumbling 27%
Playtech, the world’s largest online gaming software supplier, warned on profits for the second time in less than a year on Monday, causing its shares to drop almost 27% in early trading on the London Stock Exchange.
Shares fell to £5.52 ($7.24) ), the lowest in four years trading on the exchange.
The Isle of Man-based gambling tech company blamed the “increasingly competitive backdrop” of the Asian market.
The company forecast adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) to be between €320m ($372m) and €360m for the current year. Playtech reported an adjusted EBITDA of €322.1m in 2017. In June, Italy’s financial markets regulator paved the way for Playtech to buy the remaining 19% stake of rival Snaitech, completing its £741 million ($986 million) takeover.
“The company told us that ‘relatively sudden’ changes had occurred in China in recent weeks, with significant pricing pressure from competitors leading to Playtech products being relegated down licensee websites,” banking giant Morgan Stanley told London’s Financial Times newspaper.
Playtech said its expected revenue from Asia is now $81.5m lower than previous estimates, unless there is a “material improvement” in Malaysia. Polce have cracked down in Malaysia ahead of new laws to curb online gambling. There has also been talk of internal issues with a key licensee in China, The Times of London reported.
Investec analysts said they estimated a more than 25% drop in Playtech’s first-half average daily revenue in Asia.
“Clearly the recent trading performance in Asia is disappointing,” said Mor Weizer, Playtech’s Chief Executive Officer, although the company said that the overall performance for the first six months was broadly in line with expectations.
“The organic growth reported in the non-Asian B2B gaming business combined with the recent acquisition of Snaitech in Italy provides management with confidence that this strategy will materially improve the quality and diversification of Playtech’s performance in 2018 and beyond.”
Playtech employs 5,000 people in 17 countries.
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