Online gaming solutions company Playtech has issued its second profit warning in eight months saying that ongoing market troubles in Asia could lower profits €70 million below initial expectations.
The company said its average daily revenue in Asia “continues to be impacted by an increasingly competitive backdrop.
“Towards the end of the first half, this market has seen a particularly aggressive pricing environment from new entrants to the market and this has impacted revenue,” the company said in the report. “The management team continues to take steps to protect Playtech’s position in the region and to drive revenue generation. However, given the recent decline and in the absence of any change in market dynamics, we expect a significant impact on revenue throughout the rest of the year.”
Playtech had also issued a profit warning in November after a Malaysian government crackdown on its citizens accessing online gambling sites.
Playtech said in this latest warning that assuming there was “no material improvement in Malaysia” for the remainder of 2018, its shortfall would reach the €70 million mark.
“Given that the downturn in Asia has been relatively sudden and taking into account Playtech’s centralized cost base, the vast majority of this revenue loss will drop through to adjusted EBITDA,” the company said predicting group adjusted EBITDA in the revised range of €320 million to €360 million.
The company also pointed to increased competition from Chinese start-ups.
“Clearly the recent trading performance in Asia is disappointing,” said CEO Mor Weizer in the statement. “We have taken steps to further support our partners in the region and we will continue to work to preserve our position in the face of an increasingly competitive environment.”
