TOUGH YEAR FOR C.A.I.
08th April, 2011 at 03:13:39
Austrian gambling group suffers a Euro 35.2 million net loss in 2010
Casino Austria International management showed it was a master of understatement in reporting this week that 2010 had been a "challenging" year in which the company has suffered a Euro 35.2 million net loss after recording a net income of Euro 12.6 million in 2009.
Attributing the loss to a number of factors, management identified poor general trading conditions with weak general consumer demand, tightened regulations, smoking bans and competition from online providers operating partly in legal gray areas.
CAI also incurred high set-up costs for major projects such as the development of the online gaming platform CAI Games.com and ventures in Brussels (Viage) and Hanover (RP5), as well as for a project in Scotland (The Corinthian Club), and an entry into the Italian VLT sector.
On the positive side the company did well in the Canadian, South American and Australian regions. The operations in Canada and South America posted strong growth in earnings in the reporting year, with EBITDA in the Canada and Shipboard sector doubling to Euro 5.8 million.
EBITDA in the South America region increased by around 90 % to Euro 5.3 million, whilst the operation in Chile continued its upward trend, despite a devastating earthquake in February 2010. The casino tripled its net gaming revenues since opening in 2008.
In Australia, EBITDA was up by Euro 800 000 compared to 2009, reaching Euro 3.1 million, despite an increase in gaming taxes on gaming machines in Queensland and the drop in tourism as a result of the financial and economic crisis.
CAI managing directors Paul Herzfeld and Josef Leutgeb are to continue improving efficiencies and results through reducing costs generally, including marketing cuts; finding synergies within the group such as better cooperation in online gaming and sports betting with the sister companies win2day and tipp3; and reviewing existing partnerships to find new opportunities for cooperation and the possible sale of underperforming interests.
Current trading results have been more encouraging, with increases in players and revenues, and management expects to improve overall performance in 2011 and 2012, although significant profits are not expected to flow until 2013.
Italy holds out the promise of growth, the report notes, commenting that CAI is in a joint venture with Cogetech, a market leader in Italy in online and offline gaming.
Online gambling generally is seen as having considerable potential, and the development of CAI Games.com has provided the group with an internet gaming platform that can be launched quickly in other countries at a comparatively low cost as the regulatory trend spreads throughout Europe.
Management predicts that there will be growing enforcement in the regulated market, protecting legitimate companies through measures that may include domain-blocking of illegal operators.
In Belgium, for example, the company's partnership with Viage gives it a licence to operate online in the country starting in 2011.
Related News Tags: Canada, South America, Italy, USA