Gambling firm Playtech (PTEC) has struggled with fierce competition from China as new rivals entered the market with aggressive prices, dragging on earnings in the first half of 2018.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 13% to €145m on declining sales in Asia, although this was in line with broker Shore Capital’s expectations.
In Playtech’s Casino division, sales sharply fell by 25% with a 41% drop in Asia.
Despite the fall in earnings, shares in Playtech have climbed 10.7% higher to 573.8p as investors may be relieved there were no further warnings on profit in its Asia business, having already flagged issues earlier this year.
PRICING ENVIRONMENT ‘NOT SUSTAINABLE’
The market may also be pleased with the company’s assertion that the current pricing environment in Asia is ‘not sustainable,’ leaving pricing levels unchanged.
In July, the gambling company warned it could miss full year sales expectations by €70m, swiftly wiping off nearly a third of its market cap value.
WORLD CUP BOOSTS SNAITECH
Playtech’s recent acquisition of Italian betting firm Snaitech has enjoyed a strong performance, supported by the final weeks of the FIFA World Cup.
Shore Capital analyst Greg Johnson says the company’s performance is broadly consistent with its prior guidance and believes trading conditions in Asia have stabilised.
