Novomatic Reports 68.8% Fall in Profits for H1

Novomatic released its latest financial figures last week and they show a massive black mark against the profits column. The first half of the current financial year saw profits slump by an incredible 68.8 percent compared to last year.

Profits tumbled to €34.3 million from H1 2018. The figures were worse than that, showing a fall of 87.7 percent to €14.7 million but the overall figure had €19.5 million profit added to it from discontinued operations.

Changes to gaming regulations are blamed for the vast difference in Novomatic profits. Core markets such as Germany and Italy bore the brunt of the blame, with Australian firm Ainsworth Game Technology also having a finger pointed at it.

Novomatic Struggles in Germany and Italy

The number of Novomatic terminals rented in Germany by 11,500 units to 154,100. Revenue from Novomatic’s Germany operations slumped 6.2 percent to €338.1 million. Germany recently ratified the third amended State Treaty on Gambling, which came with a raft of rule changes. One such rule is charging licensees five percent on turnover, banning in-play betting, and preventing customers from spending more than €1,000 each month.

Italy also proved a difficult market, particularly as there is a blanket ban on gambling advertising. Huge tax hikes to online casino, bingo and fixed-odds betting terminals, up to 25 percent has reshaped the landscape. Novomatic revealed Italian revenue fell 7.6 percent to €181.8 million.

Overall, gaming taxes and betting fees increased 1.7 percent at a cost of €148.7 million. Personnel expenses grew 1.4 percent to €390.4 million. Depreciation, amortisation and impairment charges soared 61.2 percent to €249.6 million. Novomatic said this was mostly due to changes to its German gaming machine business.

Aussie Pokies Maker Sees Profit Slump

Australian pokies machine maker Ainsworth Game Technology Ltd contributed to Novomatic’s poor figures. A Novomatic press release said, “Due to performance problems in its home market of Australia, Ainsworth Game Technology Ltd recorded a decline in revenues compared to the previous year.”

Ainsworth posted a 66 percent fall in profits compared to the same reporting period of 2018. Profit after tax came in at AUD$10.9 million, down from AUD$31.9 million. Domestic revenue in Australia decreased 43 percent to $36.1 million, which resulted in $2.8 million profit.

It is not all doom and gloom for investors in Novomatic because its United Kingdom business performed well. This makes it surprising that it has agreed to sell its UK division to Inspired Entertainment for €109.4 million.

Novomatic Board Reshuffle

An announcement to the stock exchange also revealed Novomatic has reshuffled its Executive Board and Supervisory Board.

Thomas Graf, formerly Chief Technology Office, is the new CEO of Greentube Group subsidiary. Graf has more than 20 years experience in the gaming industry and holds several positions at Novomatic.

Peter Stein has left his role of Chief Financial Officer by mutual consent. Former Head of Group Treasury Johannes Gratzl replaces Stein with immediate effect. Gratzl has been a Novomatic employee for many years.

Dr. Christian Widhalm has resigned from his position of Chief Investment Officer for health reasons. Widhalm, however, continues to be available in an advisory capacity.

Founded by Johann F. Graf in 1980, Novomatic now employs approximately 30,000 people across 50 countries. Its portfolio of 255,000 gaming terminals across 2,100 locations worldwide makes Novomatic one of the largest gaming companies.

Novomatic has fingers in many pies across the live and online gaming sectors. It produces cabinet pokies, an Omni-channel product portfolio, management systems, cash management and more. Some of its most popular pokies are the standalone progressive jackpot machines. Progressive pokies include Great American Wilds, Asian Fortunes, From Dusk Till Dawn, Vampire Fortunes and Treasure of Tut.