Grupo Codere posts €164m loss following Argentina, Mexico closures

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In a trading update for the three months to 30 June 2023, Codere revealed the scale of the damage attributed to two of its biggest markets.

During the period it was forced to close 17 games rooms in Mexico and Argentina due to alleged regulatory non-compliance, although six of those have since reopened.

Despite the magnitude of the Q2 loss, the Madrid-headquartered group played down the long-term impact of the accounting impairment.

“This deterioration has no impact on the company’s liquidity situation and is a mere accounting adjustment to recognise said situation in the financial statements at the end of the first half of the year,” it explained in a statement.

Despite the challenges in Argentina and Mexico, Codere saw operating revenue grow 5% year-on-year to €334.6m.

Revenue of €63.3m from Mexico was down 3.1% compared to Q1 2023, but up 14.3% year-on-year. In Argentina the decline was more pronounced, with revenue of €75.6m – down 13.1% on Q1 and 12.0% year-on-year.

Revenue from its Spanish business was up 9.2% to €45.9m. Italian revenue of €69.3m was flat, which Codere put down to restrictions imposed in the Lazio region.

Retail was at €297.3m, while Codere’s online business was up 37.5% year-on-year to €37.4m.

Positive operating cash flow in Codere Q2

The group’s adjusted EBITDA stood at €51m, which was down 1.7% year-on-year because of the issues in Argentina and Mexico. The adjusted EBITDA margin was at 15.3%, which was one percentage point less than in 2022.

Operating expenses were up 6.3% to €266.7m, with growth of more than 14% in personnel and cost of goods sold.

Codere’s cash position at the end of the period amounted to €110m. Some €65m of this was attributable to the retail business and €45m to Codere Online.

The group said in a statement: “Despite the adverse circumstances that the group has had to face in this second quarter of the year, the EBITDA obtained and the good management of working capital have allowed it to generate a positive operating cash flow amounting to €21m during the quarter, compared to the €6m obtained in the same period of the previous year, with cash destruction in this period being 38% lower than in 2022.”

Group sees boardroom changes

The quarter saw a series of boardroom changes, including the appointment of new chief executive Gonzaga Higuero in July.

Since November 2021, Codere has been under new management after the company’s creditors took over. Control of the business was transferred to a new holding company named Codere New Topco SA, which was owned by a consortium of Codere’s former bond-holders.  

Meanwhile, the online division of the business was spun out via a SPAC merger that closed weeks after Codere New Topco was formed. 

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