Prior to the release of its pending Q3 2017 trading update (scheduled for Wednesday 8 November), the governance of Stockholm-listed online gambling group Cherry AB has issued a corporate update detailing that it has revised its full-year 2017 corporate forecast.
The firm’s revision of FY-2017 expectations follows a tougher than anticipated integration of acquired ComeOn assets having undertaken a strategic review of operations.
Updating investors, Cherry governance has revised its full-year revenues to MSEK 2,200 (£196 million) from MSEK 2,500 (£224 million). The company now targets a 2017 profit EBITDA of MSEK 400 (£35.7m) from previously reported MSEK 480 (£43 million).
In H1 2017, Cherry undertook its biggest corporate acquisition to date, acquiring European online gambling operator ComeOn outright for a total consideration of €280 million. Concluding its acquisition, Cherry governance stated that it would unify all B2C assets under its ComeOn! domain.
“The process of integrating ComeOn has not been implemented according to plan, and the delay that occurred during the summer, combined with erroneous marketing decisions, contributed to higher costs and a weaker earnings trend than planned,” Cherry detailed in its market update.
Restructuring ComeOn this October, Cherry announced the departure of Jonas Wåhlander as managing director of the online gambling division. Moving forward, Cherry governance stated that it is implementing a new management team for ComeOn, seeking to drive its acquired asset’s earning potential and capacity.
Anders Holmgren, CEO of Cherry AB commented on the corporate update: “Naturally, I am disappointed that ComeOn! has not developed as well as we previously assessed. In the Online Gaming business area, the integration process has not been implemented efficiently as a consequence of the previous management’s poor focus on business. Thus, a new management team was appointed, consisting of people with the experience, market insight and control required.
“The Online Gaming business area, with ComeOn! as its largest unit, has during the last twelve months increased its proforma revenues about 11 percent, however we are convinced that the company is capable to bring stronger growth with increased profit. We have a clear idea of what immediate actions are required, including cost reductions and focus on growth. The other business areas in the Cherry Group continue to develop well, with good cost control and well-balanced investments.”