Codere cited difficulties in Mexico and Argentina as the reason for a 13.6% decline in first-quarter revenues from €313.8m (£269.6m/$339.9m) compared to the same period last year.
Compared to Codere's Q1 2023 revenue of €363.1m, Codere's Q1 2023 revenue was significantly lower. In the first quarter, the company's adjusted EBITDA dropped 26.6%, from €64.4m to €47.3m.
Q1 consolidated net revenues were €185.9m, down 12.1% from Q1 2023's €211.5m.
Codere did point out that the group's cash position had stayed relatively consistent at €104m from €107.5m at the beginning of the quarter, despite the decline in income.
The group's adjusted EBITDA in Q1, as emphasised by Codere, demonstrated the business's steady recovery following the lifting of restrictions in Mexico and Argentina.
Codere added that it was making headway in discussions with bondholders towards a "comprehensive recapitalisation" when it announced its first quarter earnings. It is believed that this would help strengthen the financial position and decrease debt. Codere plans to provide a status report soon.
Argentina and Mexico: Difficulties
According to Codere, the company's financial numbers are expected to improve in 2024 due to improvements in two areas: Argentina's "challenging macroeconomic environment" and the scenario regarding the abolition of restrictions in both Argentina and Mexico.
In a statement, Codere highlighted the "substantial progress" made in removing operational constraints. Rules in Mexico had already forced Codere to close one of its halls and had a partial impact on another fourteen by the end of the first quarter.
The business also made note of the fact that adjustments for hyper-inflation in Argentina were not factored into its adjusted EBITDA statistics. Retail sales in the first quarter, excluding Argentina, would have been €226.2m, up 7% from the third quarter of 2023.
Revenue for Codere increased by 4% in the first quarter compared to the same period in 2023, excluding Argentina and Mexico. Furthermore, adjusted EBITDA would have increased by 20% if those two areas had been excluded.
Codere Online's persistent success
Codere Online had a solid first quarter following a strong 2023, but the company nevertheless saw a decline in revenue and adjusted EBITDA.
Revenues for Codere Online reached €53 million in the first quarter, a record high and a 34.2% increase compared to €39.5 million in the same period previous year. This was mainly caused by a 51.1% increase in income from €17.6m to €26.6m in Mexico compared to the previous year. At the same time, the Spanish market for Codere Online grew from €18.4m to €22.3m, a 21.2% rise.
Online sales accounted for 16.9% of Codere's total income in Q1, while retail sales brought in €260.8m, a decrease of 19.4% from €323.6m in Q1 2017.
As a result of increased marketing spending, the company's active customer base in Mexico and Spain increased from 89.8 million to 112.5 million, a 25.2% increase.
Compared to the same quarter a year ago, Codere Online's adjusted EBITDA of €8.8m was more than quadruple. Net income for Codere Online increased to €3.4m in Q1 2023 from €1.3m in Q1 2023. The company's liquidity stayed steady at €38.5m, as before.
The anticipation of Codere Online is growing
Following a solid first quarter, Codere Online is increasing its forecasts for the year 2024. After previously estimating net gaming income between €185 million and €200 million, it has now raised that range to €195 million to €210 million. Additionally, the company reaffirmed its objective to achieve positive adjusted EBITDA and cash flow for the entire year of 2024.
Oscar Iglesias, chief financial officer of Codere Online, thinks the firm has a good chance of continuing its development trend.
"Once again, top line growth exceeded our expectations in the first quarter," Iglesias said, adding that Mexico was the company's largest market by revenue, continuing to surpass Spain.
For the first time ever, Mexico is also delivering positive adjusted EBITDA, which is something we are quite thrilled about.
Shops struggling
The group's retail division failed to live up to Codere Online's stellar first quarter performance.
Retail sales at Codere fell 59.1 percent, from €84.7 million to €34.6 million, as a result of Argentina's economic woes. Retail sales in Mexico came to €54 million, down 11.3% from the previous year.
Despite a 2.6% decline to €78.3m in revenue, Italy remained the company's largest retail market in Q1. Revenues in Uruguay were €17.4m, up 4.2% from the previous quarter, making it the sole retail market to experience growth.
Adjusted EBITDA for Codere's retail division was €38.5m, down 35.8 percent from €60m in the corresponding period a year ago.
