Games group Embracer misses Q3 operating profit estimate

By Thomson Reuters Feb 15, 2024 | 2:01 AM

By Jesus Calero

(Reuters) – Swedish games developer Embracer on Thursday reported slightly weaker than expected operating profit for the October to December period, adding it may miss its debt reduction target, but it maintained its full-year forecast.

The owner of the Tomb Raider franchise said its adjusted operating profit rose 7% to 2.15 billion Swedish crowns ($204.40 million) in the quarter, slightly below analysts’ forecasts of 2.21 billion crowns seen in a company-provided consensus.

The company said it will reach the low end of its 7.0 billion to 9.0 billion crown forecast for adjusted operating profit, driven by a softer 2023/2024 PC/Console outlook, recent game performance, and some fourth-quarter pipeline shifts.

Embracer, amid a restructuring, may fall short of its March net debt target of 8 billion crowns, yet remained committed to a 12-month leverage goal and shareholder value maximisation.

Jefferies said in a note that third-quarter results are considered “soft” despite the ongoing restructuring efforts, but notes that mobile games segments saw results above expectations.

“We are very pleased with the mobile numbers. Profitability came in record high at 47%, over 600 million crowns in profits, which is a 2% growth year over year,” CEO Lars Wingefors told Reuters.

This success, he added, is partly attributed to a strategic shift from hyper-casual games towards more recurring games.

The game developer, like other gaming groups, benefited from growing demand for video games during COVID-19-related lockdowns, but has since been hit by development delays, falling demand and poor reception for some of its new titles.

It suffered another setback in May after a $2 billion partnership deal with an undisclosed company fell through, which led it to announce a major restructuring plan in June.

($1 = 10.5186 Swedish crowns)

(Reporting by Jesus Calero; Editing by Kim Coghill and Christopher Cushing)