PartyGaming First Year Revenues Drop
LONDON (Reuters) - Online gambling group PartyGaming (PRTY.L: Quote, Profile, Research) said first-half revenue fell a fifth due to adverse currency movements, competitive pressures and the consumer slowdown but trade in the past three weeks had been strong.
PartyGaming, which runs the PartyPoker site, posted a 6.5 percent fall in earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $60.7 million (37.2 million pounds) in the six months to the end of June on revenues 21 percent lower at $201 million.
Peer 888 (888.L: Quote, Profile, Research) on Thursday reported a fall in first-half profit but said it expected to grow in its fourth quarter.
PartyGaming said on Friday profit took a $27 million hit from the movement of the dollar against the pound and euro.
"We calculate that had it not been for adverse currency movements EBITDA would have been around 10 percent ahead of the $64.9 million reported in 2008," said Numis analyst Wyn Ellis.
Shares in PartyGaming, which have risen by more than a third this year, were 0.3 percent higher at 267 pence by 9:20 a.m., valuing the group at around 1.1 billion pounds. 888 shares fell 2.7 percent to 85 pence.
PartyGaming said trade had been strong in the three weeks to August 18, with average gross daily revenue at $1.9 million per day -- up a third on the average for the previous quarter.
"We're quite optimistic that you'll see PartyGaming return to growth in the fourth quarter. This is good progress in what is still a challenging business environment," Chief Executive Jim Ryan told reporters on a conference call.
First-half casino revenues were flat at $89.3 million but poker revenue fell a third to $102.6 million. Sports betting sales fell to $7.7 million from $8.9 million, while bingo sales dropped to $1.7 million from $2.5 million.
The company reached an agreement with U.S. authorities in April confirming it would not be prosecuted for its activities prior to the passing of the Unlawful Internet Gambling Enforcement Act in October 2006.
As part of the agreement PartyGaming said it would pay U.S. authorities $105 million over a 42-month period, which resulted in a first-half pretax loss of $66.9 million compared with a profit of $22.7 million in the same period last year.
"The agreement has put a line under the issue and removed questions about what is going to happen. It has also opened up the capital markets for us and allows us to pursue acquisitions we would otherwise have been unable to go after," said Ryan.
PartyGaming, which acquired British online gambling marketing firm Cashcade in July, said it would look to make futher purchases this year.
"Cashcade won't be our last acquisition of the year -- we have the firepower to pursue other acquisitions. We have $40 million of our cash available as well as equity," said Ryan.ls (Philadelphia).
