Codere hit by Latin America exchange rates in 2018
Codere has cited the devaluation of the Argentine Peso and subsequent impact on its business in the county as the main reason behind a 9.9% drop in revenue in 2018.
Operating revenue amounted to €1.48bn (£1.27bn/$1.68bn) in the 12 months to December 31, 2018, down from €1.64bn in the previous year.
Argentina proved to be a troublesome market throughout the past year, despite being the largest source of income for Codere. The operator generated €407.7m in revenue in Argentina during 2018, some way ahead of Italy with €336.5m and Mexico on €328.3m.
However, Argentina revenue fell 30% year-on-year due to the depreciation of the Argentine Peso against the Euro, but this was partially offset by growth in Spain, where revenue was up 17% to €188.1m.
On a constant currency basis, Codere said group revenue would have increased 9.3%.
Codere also saw minor growth in Italy, where revenue climbed by 0.2% year-on-year to €336.5m, while Uruguay revenue was up 0.6% to €70.7m. However, the operator suffered revenue fall in all other markets where it is active, including Mexico, Panama, Colombia and Brazil.
Unfavourable currency trends also hit net profit, which slipped from a positive of €2.8m in 2017 to a net loss of €40.4m. Codere noted a €33.9m foreign exchange loss in 2018 and without this, together with non-recurring items and inflation accounting, the operator would have registered a profit of €46.4m.
Codere was able to offset some of this impact by cutting its operating expenses in 2018, with total spend amounting to €1.19bn, down from €1.36bn in the previous year.
Codere made savings right across the business, with personnel costs falling from €298.3m to €252.5m, while rental spending was cut from €125.1m to €110.4m. Expenses related to the costs of goods sold dropped from €289.5m to €249.7m, while other spending was down 13.8% to €249.7m. In addition, Codere paid less in gaming and other taxes, with this spend down 11.5% to €528.1m.
Meanwhile, Codere noted a 3.4% year-on-year increase in adjusted EBITDA, with this figure standing at €282.9m for the year. However, operating profit dropped 26.1% to €96.9m, while adjusted EBITDAR, including rentals, fell by 1.4% to €393.2m.
Codere’s results in the fourth quarter made for similar reading, with operating revenue down 14.6% to €360.8m, mainly due to issues related to the Argentine Peso.
However, net income amount to a positive of €14.8m for the three months to December 31, 2018, with adjusted EBITDA also up 17.5% to €74.3m. However, adjusted EBITDA with rentals was down 1.5% to €103.0m.
Image: Esteban Maringolo