With a significant growth in Italy and Spain, the firm plans to intensify its presence in the US

Novomatic Group increases sales by 10.5 percent in 2018

Novomatic reports that its business remains stable on a high level: EBITDA is more than EUR 550 million (USD 613.2 M), and operating cash flow rose to over EUR 480 million (USD 535.1 M).
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With a total of 226 subsidiaries included in its annual report, 63 percent of sales revenue derives from the “Gaming Operations” segment. The Spanish market saw a particularly dynamic growth with an increase in sales of 20 percent. The Group now employs a total of 23,495 employees around the world, and has around 2,100 of its own gaming facilities. Global taxes amounted to EUR 500 million (USD 557.4 M).

In the 2018 fiscal year, Novomatic AG Group succeeded in increasing sales by 10.5 percent to EUR 2,613.6 million (around USD 2,914.1 million), up from 2017 EUR 2,366.1 million. 63 percent of sales revenue derives from the “Gaming Operations” segment, which operates gaming machines for the company across the globe, with the “Gaming Technology” division contributing a further 37 percent.

Operational business during the reporting period was “extremely satisfactory” according to the company, considering that gaming revenues worldwide grew by 3.9 percent in the year 2018 compared with the previous year to USD 453 billion (Novomatic quotes Global Betting and Gaming Consultants’ Global Gambling Report as its source for those figures). Herewith the company was able to increase the revenues in all the core markets. A total of 226 subsidiaries were fully included in the consolidated balance sheet.

The firm reveals positive numbers for the Austrian federal budget as well. Novomatic tax and duty payments in Austria rose to a new high of EUR 101 million (2017: EUR 91 million), and global taxes amounted to EUR 500 million. The Group now employs a total of 23,495 employees around the world (2017: 23,004), with the company providing secure employment for around 3,200 individuals from 70 countries in Austria alone.

“Growth was driven by European core markets, with results in Germany and Italy being influenced by regulatory measures,” said Harald Neumann, CEO of Novomatic AG, summarizing the results.

For example, in the reporting period in Italy, which is Europe’s largest market measured by the number of gaming machines operated, with around 320,000 gaming machines, there was an increase in gambling taxes. Nevertheless, the Group's market position in Italy was further expanded. Sales in Italy reached a value of EUR 401.1 million (2017: EUR 371.7 million). The Spanish market also saw particularly dynamic growth with an increase in sales of 20 percent to EUR 152.1 million (2017: EUR 126.4 million).

During the 2018 fiscal year, the Group also acquired several smaller operators of gaming facilities in Germany, the Netherlands, Spain and Eastern Europe, predominantly gaming halls, bars and betting businesses. These acquisitions enhance the Group's market position in some of Europe’s core markets. The Group now has around 2,100 of its own gaming facilities including casinos, arcades, sports betting outlets and bingo companies.

Business development remains stable despite regulatory challenges. During the year under review, operating Cash flow reached EUR 483.3 million, therefore increased compared with the previous year (2017: EUR 422.3 million). The EBITDA remained stable at EUR 555.6 million (2017: EUR 561.9 million).

In 2018, share prices for gaming companies dropped across the world, with this trend reflected in the market price for Ainsworth Game Technology Ltd. (AGT) stocks. The most significant extraordinary write down – of around EUR 264.3 million – concerned AGT. The first steps towards reversing the trend, such as the appointment of Lawrence Levy as the new CEO of AGT, have already been taken. The company is also impacted by the introduction of new regulatory provisions, for instance in Germany.

Furthermore, Neumann sees strong potential in the consolidation begun in 2018, with the aim of achieving the greatest possible synergy between the company’s various holdings: “After rapid growth over the last few years, in particular through the acquisition of other companies, we will continue to optimize internal processes and structures at an international level”. The Group plans to intensify its involvement in the USA, both in sports betting – following on from liberalization – and in the gaming sector.

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