Despite the unprecedented situation and multiple operating restrictions, Cirsa has proven the stability of its business model and has taken immediate steps to adapt its activity to the new environment. Despite the loss in revenue in 3Q2020, the company has started to recover rapidly and has even achieved pre-Covid results in some areas.
Net Operating Revenues and Ebitda Suffer from Closures and Operating Restrictions
Cirsa, a leading gaming group in Spain, Italy, and a number of countries in Latin America, was one of the many operators that felt the negative impact of Covid-19 restrictions in its balance sheet for the third quarter of 2020.
The company posted net operating revenues of €232.8 million, corresponding to a 40.7% decrease from €392.3 million last year as a result of the containment measures in Spain and Italy, as well as the temporary shutdown and operational restrictions in Latam between July and September.
Positive Ebitda of €37.5 million was achieved during 3Q2020 due to the restart of activity in Spain and Italy. Gambling providers in Spain has to receive an official go-ahead from the country’s gambling regulator before resuming activity.
Despite the decrease by 68% in annual terms, Ebitda increased from the negative €51.4 million in the second quarter, when all operations closed in March and began to reopen only towards the end of the quarter. Moreover, Ebitda for the slots division in Spain and Italy even exceeded Q32019 levels by 7.9%.
Bingo, Slots and Online Casino Perform Well
On the other hand, the bingo division, which was hit by the closures in Mexico and the mitigation measures, such as hourly restrictions, reduced slots, and limited capacity achieved positive Ebitda in the period July-September. The casino segment was the worst hit due to the total closure in Latam during the quarter and is still on the negative side of Ebitda.
The company highlighted that following the start of the de-escalation plans in Spain and Italy in mid or late July, the activity in these countries rapidly gained momentum and just after a few weeks, slot operations compensated between 80% and 90% of the revenue from July 2019.
During lockdown, the business activity was supported by sports betting house Sportium, which continued its stable growth even after the reopening of non-essential activity.
Returning to operations post-lockdown
Despite the strict restrictions, Cirsa is showing the capacity to keep up with the measures and adapt well to the new situation. Venues in Spain and Italy are subject to closures and government restrictions, such as reduced opening hours and capacity limitations, and the situation is changing rapidly due to the current state in each region. Last month, Italy closed once again casinos and other entertainment venues to reduce the spread of the virus.
Activity in Latin America has also been just restarted following its almost complete halt during the quarter. As of 24 November, all venues in the Dominican Republic, Colombia, Costa Rica, and Panama are open, while all operations in Peru and seven casinos out of 28 in Mexico remain closed.
In the nine-month period ended September 2020, revenue decreased by 45.2% to €630.9 year-over-year, while operating profit was down 77.5% to €74.9 million.