Codere’s Revenue Plummets in First Quarter Amidst COVID-19 Pandemic

Codere, the gaming company operating in Spain, Italy, and Latin America, experienced a 21.3% decline in revenue during the first quarter, reaching €278.5 million. Simultaneously, losses climbed to €97.1 million due to the enforced closure of physical stores as a result of the novel coronavirus (COVID-19) outbreak and currency fluctuations.

The €278.5 million in revenue generated in the first three months of the year was primarily driven by Italy. However, as Italy was one of the earliest European countries to be impacted by COVID-19, its total revenue decreased by 39.4% year-over-year to €86.5 million. Spain, another severely affected country, saw a 16.7% drop in revenue, reaching €40.5 million.

An additional €64.8 million in revenue originated from Argentina, representing a 19.8% decrease. Mexico’s contribution declined by 24.9% to €60.4 million. Panama’s revenue fell by 23.2% to €14.6 million, while Uruguay’s total revenue decreased by 9.6% to €17 million. Conversely, Colombia’s revenue experienced a modest 0.9% decline, reaching €4.9 million.

Online revenue demonstrated growth, albeit at a slower pace than the decline in physical store revenue. The online channel’s total revenue for the first quarter amounted to €16.1 million, representing a 7.6% increase.

Coderes enterprise experienced a significant setback due to the COVID-19 outbreak commencing in March. They were compelled to shutter all their physical establishments, resulting in solely their online operations remaining active. Even these online endeavors suffered as major sporting events were called off.

Their expenditures decreased considerably, particularly after the closure of their physical locations. They achieved substantial cost savings and even secured a loan to provide financial support.

Their revenue derived from gambling taxes plummeted, and other tax receipts also declined. They also implemented reductions in employee expenses.

They realized cost savings on rent for their gaming facilities but incurred higher rental expenses for slot machines. They also reduced spending on sales and marketing but increased spending on utilities while decreasing maintenance expenditures. They paid less to contractors but more for insurance. Travel and transportation costs remained consistent, while other costs decreased.

These factors combined to result in a significant reduction in their profits. They also incurred financial losses due to fluctuations in the value of their agreements and paid certain fees.

Codere put 1 million euros into gear, including gaming machines, and recorded a 2 million euro write-down.

Non-routine expenses hit 7.7 million euros, with 4.4 million euros tied to online marketing outlays.

As a result, the firm incurred an operating deficit of 7.1 million euros. After accounting for inflation in the Argentine peso in 2019 due to the election of Alberto Fernández as president, and for inflation in other Latin American currencies due to uncertainty about the effect of the COVID-19 outbreak, Codere’s loss reached 10.4 million euros.

The operator paid 23.1 million euros in net interest expense, compared to a profit of 28.3 million euros in the previous year, and also incurred a loss of 2.8 million euros on financial investments.

Currency fluctuations were again influenced by Fernández’s election triumph over the more market-friendly incumbent president Mauricio Macri and the global uncertainty caused by the pandemic, resulting in a loss of 49.9 million euros. After adjusting for inflation, Codere’s pre-tax loss reached 85 million euros.

Codere paid 14.1 million euros in income tax, an increase of 64.9% compared to 2019. The operator generated 3.3 million euros in income from its minority-owned businesses, compared to a loss of 1.6 million euros in 2019.

Therefore, after again factoring in inflation, Codere’s net loss was 97.1 million euros, compared to 8.6 million euros in 2019.

Currently, only Uruguayan horse racing and some Spanish sales outlets have resumed operations, but the company stated it anticipates the rest of its operations to gradually resume in June.

Codere has enlisted financial consultants to assist them in securing additional funds, with the objective of raising 105 million euros. This will provide them with greater adaptability as they navigate the unpredictable nature of the pandemic and its effects on their business revival.

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