By Jesus Calero
(Reuters) – Games developer Embracer on Thursday posted a bigger-than-expected drop in second-quarter operating profit driven by game release delays in a seasonally-softer quarter.
The owner of the Tomb Raider franchise said its adjusted operating profit fell 33% to 1.2 billion Swedish crowns ($109.18 million) in the quarter through September, missing analysts’ forecast of 1.8 billion crowns in a company-provided consensus.
“We now expect lower earnings this year due to the delay of a number of notable H2 releases,” CEO Lars Wingefors said in a statement.
The Swedish company, like other gaming groups, benefited from growing demand for video games during COVID-19 lockdowns, but has since been hit by development delays, falling demand and poor reception for some of its new titles.
In recent years, Embracer has begun to divest some of its studios as part of restructuring efforts aimed at reducing costs and managing debt, and is charting a new course by splitting into three publicly traded entities by 2025.
Wingefors said that the planned spin-off of Asmodee, one of the key divisions, remains on track for this financial year.
The company also announced on Thursday the divestment of its subsidiary Easybrain for a consideration of $1.2 billion.
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The divestment of Easybrain is an attractive deal, which will reduce net debt significantly and strengthen the company’s balance sheet, Stockholm-based broker Redeye said.
“This will allow the split-up companies to have stronger position for growth, including Asmodee, which was previously expected to be separated with a high debt level,” it added.
The disposal valuation appears fair, and will likely eliminate any remaining overhang from leverage, J.P. Morgan analysts said in a note.
Shares of the company were up 8% at market open.
($1 = 10.9910 Swedish crowns)
(Reporting by Jesus Calero; Editing by Mrigank Dhaniwala)
