March 9, 2017 / 7:14 AM / 4 months ago

Betting firm Fortuna core profit drops more than expected in 2016

3 Min Read

* EBITDA declines 18.5 pct in 2016

* Sees EBITDA rising 20-25 pct in 2017

* Amounts staked beats co outlook in 2016

* Plans to sell Czech lottery business in Q2

* Confirms no dividend in 2016 and 2017

PRAGUE, March 9 (Reuters) - Czech betting firm Fortuna Entertainment Group posted a deeper-than-expected fall in 2016 core profit due to rising operating costs, but said it expected earnings to rise in 2017.

The company, which has frozen dividend payments for 2016 and 2017 because of investments, also said it expected to sell its Czech lottery business in the second quarter.

Fortuna, active in the Czech, Slovak and Polish markets, said it booked impairment charges of 1.9 million euros ($2.00 million) related to the expected sale.

Earnings before interest, tax, depreciation and amortisation (EBITDA) dropped by 18.5 percent to 22.1 million euros in 2016, deeper than the company's outlook of a 10-15 percent fall. Analysts in a Reuters poll had expected an EBITDA of 23.5 million euros.

Net profit fell 42.4 percent last year to 11.2 million euros. Amounts staked rose by 22.6 percent to 1.04 billion euros, in line with analysts' estimates and above Fortuna's guidance.

"Our EBITDA was impacted by the increase in the betting tax rate in the Czech Republic, unfavourable sports results in 2016 and by a planned increase of operating costs to support growth opportunities," Chief Executive Per Widerstrom said.

The company confirmed it planned no dividend for 2016 and 2017 and would announce a new policy after this year.

It said online betting would drive growth in 2017 and it would introduce new online games in the Czech Republic but an absence of major soccer events would weigh on its performance.

It forecast total bets could grow up to 1.3 billion euros in 2017 while core profit EBITDA could rise by 20-25 percent. Investments into a new enhanced sports betting and gaming platform, data warehouse and a front-end system would push investment spending to 8 million to 10 million euros, it said. ($1 = 0.9489 euros) (Reporting by Jason Hovet; Editing by Subhranshu Sahu)

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