Codere Q3 Earnings Exceed Guidance

16th November 2009 9:51 am GMT

Spanish gaming group Codere S.A has reported an 80% increase in net income to €8.8 million for the third quarter of 2009, despite revenues falling 16% compared to the same period last year as a result of the continued weak macroeconomic situation in Spain and the impact of swine flu in Argentina.

Revenues fell by 16% year-on-year to €228.6 million for the quarter following a 19% decline in revenues in Argentina, a 20% fall in Mexico, and a decrease of 16% in the group's Spanish AWP business.

Other operations fell a combined 16% to €60.0 million with only Panama, Uruguay and the company's fledgling sports betting business in Spain seeing increased revenues for the quarter. Codere increased its number of sports betting shops in Spain by 102 during the period with a total of 179 betting shops now operational in Madrid and the Basque region.

Growth in the company's machine portfolio was concentrated in Mexico where the number of machines increased by 9% to 21,236, while the number of bingo halls increased by seven to a total of 142.

Total operating expenses fell 17% to €198.2 million, leading the company to an operating profit of €29.4 million, down 16% year-on-year.

Codere's EBITDA improved to €52.3 million for the third quarter, above the company's guidance range of €44-€45 million, reflecting continued growth in local currency in Argentina and Mexico, offset by weakness in Spain due primarily to the macroeconomic situation, the impact of swine flu in Argentina, and the depreciation of the Mexican and Argentine pesos against the Euro, by 22% and 20% respectively.

As a result net income amounted to €8.8 million during the third quarter, an increase of 80% versus the corresponding period last year.

For the nine month period revenues fell 7% to €721.2 million with net income down 45% to €3.1 million.

During the quarter the gaming regulator of the province of Buenos Aires renewed Codere's La Plata licence until June 2021 for an upfront renewal fee of AR$28 million (approximately €5 million) and a canon surcharge of AR$66 million (€12 million), accrued and payable in 60 monthly instalments.

As at September 30th the company held €84.6 million in cash compared to €102.4 million last year.

Shares in Groupo Codere S.A (Co. Profile) (MCE:CDR) are currently trading up 1.49% at €5.45 per share in Madrid this morning.

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