Embracer Group has recently unveiled its latest financial results alongside an update on its ongoing restructuring initiative, indicating that it is nearing its culmination phase.
Despite encountering declines in its PC/console games segment, the company showcased commendable sales performance across its various divisions for the three months ending December 31, 2023. However, Embracer Group concluded the year with a net debt of SEK 16.1 billion ($1.5 billion).
The objective of the restructuring program was to reduce this debt to SEK 8 billion ($762.1 million) by the end of the fiscal year on March 31, 2024. Nonetheless, CEO Lars Wingefors expressed skepticism about the likelihood of achieving this target.
Here are the key takeaways:
Financial Figures
(Oct-Dec 2023):
Sales: SEK 12.1 billion ($1.2 billion, up 3.7% year-on-year)
Nine-month results (Apr-Dec 2023):
Sales: SEK 33.3 billion ($3.2 billion, up 18%)
Net debt: SEK 16.1 billion ($1.5 billion, compared to SEK 14.3 billion / $1.4 billion at the end of 2022)
Highlights
In its report, Embracer’s CEO Wingefors noted the company’s progress towards its restructuring objectives as it nears the final phase of the program. This phase primarily focuses on potential divestments or consolidation strategies aimed at streamlining operations.
While meeting the original net debt target seems improbable, Wingefors hinted at potential divestments that could substantially alleviate Embracer’s debt burden in the upcoming financial year. However, specific details regarding which business segments might be divested were not disclosed.
Wingefors emphasized the company’s commitment to maximizing shareholder value in any strategic decision. Additionally, Embracer recently extended its credit and loan agreements into 2025, providing further financial flexibility.
Regarding workforce restructuring, the report highlighted that 1,387 positions were eliminated since the commencement of the restructuring in June, representing 8% of the global workforce. This figure excludes additional job cuts implemented in recent months affecting various subsidiaries.
Looking ahead, Embracer plans to maintain third-party publishing alongside internally developed titles but with a more discerning approach. The company aims for a more focused portfolio centered around established, owned IPs and studios to enhance predictability and profitability.
Q3 Performance
Despite challenges, Embracer witnessed a stable quarter, surpassing management expectations achieving all-time high Q3 sales. While tabletop and mobile games showed growth, PC and console sales experienced a 9% decline year-on-year due to fewer notable releases, leading to increased reliance on back catalog sales.
Embracer anticipates improved performance in the PC and console segment in Q4, with an upcoming lineup including titles such as Tomb Raider 1-3 Remastered, Homeworld 3, Alone In The Dark, and South Park: Snow Day.
