Novomatic posts double-digit revenue growth after US and Europe expansion

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Following several noteworthy acquisitions and expansion into European regulated territory Novomatic has reported revenue for the first half of 2018 jumped 12.6 percent to $1.6bn.

The gaming technology company stated earnings for the period rose 11.6 percent to $369.6m after six months of focused company growth.

“This pleasing result confirms our strategy of consolidating our market leadership in existing markets and of opening up new markets and technologies through acquisitions,” said CEO Harald Neumann.

“Acquisitions of smaller companies in the core markets of Germany, Italy, Spain and Eastern Europe, primarily in the areas of slot arcade operations, bar installation and sports betting, [are] enhancing market position in some of Europe’s core markets.”

Alongside European expansion, sales revenue derived from gaming machines increased 96.2 percent as a result of a strategic investment in the Australian and US markets.

Novomatic finalised the acquisition of New South Wales-based machine developer Ainsworth Game Technology in January of this year, purchasing a 52 percent stake in the company for $359.4m.

The deal, which forms part of Novomatic’s global strategy, was subject to extensive regulatory approvals in Australia, South America and, most importantly for the firm, from the Nevada Gaming Commission in the US.

“Our shares in Ainsworth are strategically very important for Novomatic,” said Neumann at the time. “The joint plan is to increase market share in the US to about 10% over the next five years.”

Though revenue increases mirrored the rate of company expansion for H118, analysts at Regulus Partners observed that European expansion would be “likely to continue organic regulatory pressure, while Australia remains a market of high regulatory risk for machines, in our view.”

“Equally, Novomatic’s online position is now even weaker after the loss of key German revenues – now representing only 3.9% of group revenue (B2B and B2C).”

However, in its half year filing, Novomatic outlined that “despite investment-intensive regulatory challenges in Germany and Italy” that its pre-tax earnings had increased 23 percent to $172.5m.

Regulus also admitted that the acquisition-focused first half of 2018 had “offset organic issues at the group level,” adding the company has “successfully diversified away from Germany machines risk.”

Despite global expansion having a significant positive impact on revenues, a company statement added that Novomatic will now focus on consolidating “the rapid growth of recent years.”

“The focus is on optimising internal processes and structures across borders,” added Neumann.

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