The Austrian gaming company Novomatic has reported lower profits for the six-month period ended 30 June. This is due to rising costs, which offset an overall increase in revenue.
Novomatic reported continued inflationary pressures for H1. The tightening of monetary policy and the resulting interest rate landscape led to a six-month increase in costs.
The company reported EUR1,58bn revenue in the first six months of 2023. This is a 20.0% increase from the EUR1.32bn revenue announced for the same period in 2020. The provider attributed the growth in revenue to the “good performance and the demand for [its] product”.
Novomatic Online’s revenue grew across all segments and markets.
According to the provider, the rental of slot machines accounted for the largest increase in revenue, increasing by EUR124,5m or 20.8%. The gaming technology division of the company reported EUR574.2m revenue for H1 2023.
Novomatic’s revenue increased by EUR40.2m in Germany, Italy, and Eastern Europe.
EUR25,8m and EUR24.9m, respectively.
Acquisitions were also cited as the reason for the increase in revenue.
Revenue increases more than offset by increased costs
Total gambling taxes and fees amounted to EUR207.5m in H1. This represents a 29,6% increase over the previous year. This was due to a general increase in revenues, according to the business.
Costs for materials, other services and purchased goods also increased due to the increase in revenue from gaming machines. These costs rose by 9.1%, to EUR168.m
Personnel costs increased by EUR101.4m (25.5%) to EUR498.5m. The increase in personnel costs was due to M&A activities during the past six months, and high inflation that led to higher wages.
Through Greentube, Novomatic’s digital gaming and entertainment unit, it acquired Ineor d.o.o. and the Alteatec Group in the first half of 2023. The company also acquired Italian arcade operator, 187 Srl as well as several small UK slot parlours.
Other operating expenses increased by 26.5%, to EUR441.8m. This was due to an increase in advertising costs for Eastern Europe and online. The rise in other operating expenses was also due to energy costs and fluctuations in exchange rates.
Novomatic’s profits fall by H1 due to finance costs
Novomatic’s earnings before interest tax, depreciation, and amortization (EBITDA), after expenses, were EUR386.1m. This was an increase of 3.9% over the previous year. Both the supplier’s increased revenue and costs were attributed to changes in macroeconomic developments.
A significant increase in financial costs, from EUR0.6m up to EUR36.6m in the reporting period, resulted in a reduction of profits. The rise in interest rates was the cause of this.
Novomatic has reported a pre-tax profit of EUR161.2m. The company reported an overall result of EUR98.3m after paying EUR62.9m as income tax. This represents a decline of 20% from the EUR122.9m that the company reported last year.
