During the second quarter of the year, Codere faced significant challenges in its key markets of Mexico and Argentina. The company was compelled to close 17 games rooms in these countries due to alleged regulatory non-compliance, although six have since reopened.
Despite the negative impact on earnings, Codere reassured stakeholders that this accounting impairment does not affect its liquidity position. The company clarified that it is merely adjusting its financial statements to reflect the situation at the end of the first half of the year.
Despite the challenges in Argentina and Mexico, Codere reported a 5% year-on-year increase in operating revenue, amounting to €334.6m. Revenue from Mexico declined 3.1% compared to Q1 2023, but saw a positive year-on-year growth of 14.3%. In Argentina, revenue decreased by 13.1% compared to Q1 and by 12.0% year-on-year. Spanish business revenue, on the other hand, grew by 9.2% to reach €45.9m. Italian revenue remained steady at €69.3m, which Codere attributed to restrictions in the Lazio region. Retail revenue stood at €297.3m, while the online business experienced a significant year-on-year growth of 37.5%, amounting to €37.4m.
Despite the challenges faced in Argentina and Mexico, Codere achieved a positive operating cash flow of €21m in the second quarter, compared to €6m in the same period the previous year. The company’s adjusted EBITDA was €51m, representing a 1.7% year-on-year decrease due to the issues in Argentina and Mexico. The adjusted EBITDA margin was 15.3%, one percentage point lower than the previous year. Operating expenses increased by 6.3% to reach €266.7m, with personnel and cost of goods sold experiencing growth of over 14%. Codere’s cash position at the end of the quarter was €110m, with €65m attributed to the retail business and €45m to Codere Online.
During the quarter, Codere underwent changes in its boardroom, including the appointment of new CEO Gonzaga Higuero in July. Since November 2021, the company has been under new management after control of the business was transferred to a new holding company named Codere New Topco SA, owned by a consortium of Codere’s former bondholders. Additionally, the online division of the company was separated through a SPAC merger that concluded shortly after the formation of Codere New Topco.
