Cherry looks to future with difficult ComeOn integration almost complete

Cherry today said the firm was primed for “increased growth and profitability” with the tougher than expected integration of its online business with ComeOn now almost complete.

The operator’s online gaming revenues increased 214% to MSEK448m (£41m), but organic growth for the period was just 14% with an EBITDA margin of 15% that will likely struggle to cover any Swedish tax hike as a result of market regulation, analysts said.

Cherry CEO, Anders Holmgren, said the integration of the online gaming operations within ComeOn “continued to affect growth and profitability negatively in the third quarter”, but added “the lion’s share has been completed”.

“Together with the new management, this lays a solid foundation for increased growth and profitability,” Holmgren added.

The integration issues caused the firm to issue a profit warning last week, and contributed to the departure of ComeOn CEO Jonas Wahlander in October.

Holmgren confirmed that several long-time ComeOn executives had been appointed to lead operations, while the company’s chairman, Tomas Johansson, will be the acting managing director while a new MD is recruited.

“Together with the new company management, appointed in late October, he will focus on the market offer, cost reduction and growth,” Holmgren said.

The wider group saw a 165% year-on-year rise in group revenues for Q3 to MSEK567m (£51m).

EBITDA also increased by 263% to MSEK112 (£10m) in Q3, while profit for the period amounted to MSEK42 (£3.8m).

Holmgren added: “In the third quarter, we unfortunately saw our largest business area lose momentum, although the new management, with its extensive experience of the industry, has taken measures to increase both growth and profitability.

“In online gaming, we are now in a new phase and, with the right conditions, we will be able to increase both growth and profitability.”