Bwin pins second-quarter loss on one-off costs

VIENNA Thu Aug 19, 2010 2:13pm BST

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VIENNA (Reuters) - Austrian internet bookmaker bwin BWIN.VI, which is merging with Britain's PartyGaming PRTY.L, said its second-quarter loss was due to one-off startup and marketing costs and would not recur in the rest of the year.

Bwin, Europe's biggest online sport betting operator, posted second-quarter core earnings that were only half of what analysts had expected and turned into a loss on the bottom line, mainly due to costs for starting a French betting site.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for the June quarter fell 27 percent to 11 million euros (9 million pounds), as marketing costs for the Soccer World Cup also weighed. Analysts in a Reuters poll had on average expected 20 million euros.

"What the market has underestimated was the costs for the French startup," said UniCredit analyst Katharina Kastenberger. "On the cost side, the second half of the year is going to be much better."

Bwin won a licence in June to offer online sport bets in France and has spent money on software and marketing for the new websites.

Bwin shares initially fell on Thursday, extending a drop that started last week, but turned positive when the company gave a full-year outlook that analysts said showed the disappointing results were a one-off.

Bwin said it expected its EBITDA margin to reach 25 percent of net gaming revenue in the full year, which UniCredit's Kastenberger said was in line with market expectations.

"The guidance was very vague but it's consistent with what the market expects, which means that the costs which caused the second quarter loss are a one-off," Kastenberger said.

By 1:37 p.m. British time, bwin stock was up 3.4 percent at 38.395 euros, still off a 45.50 euro peak reached when bwin announced its plans to merge with PartyGaming on July 29.

Bwin said its planned merger with PartyGaming was on track to close early next year.

The deal to create a $3.3 billion online gaming business, the world's biggest listed internet gambling company, is designed to give the groups enough scale to enter the lucrative U.S. market once deregulation is in place.

Bwin's share price is tied closely to PartyGaming's since the deal was announced, as its shareholders will get 12.23 PartyGaming shares for each bwin share in the merger.

PartyGaming earlier this month posted a 14 percent rise in first-half profit and said it had traded in line with internal hopes in its second-half so far.

(Additional reporting by Maria Sheahan; Editing by Dan Lalor and Erica Billingham)

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