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Interim Report: January-March 2018

Key insights

7 takeaways

01
Modern Times Group achieved record Q1 2018 financial performance with net sales of SEK 4,674 million and 9.2% organic growth.See it on page 16
02
Operating income rose 73% to SEK 237 million, driven by the MTGx segment achieving profitability and an 88% surge in digital sales.See it on page 18
03
Esports revenue grew by 32%, supported by the successful integration of acquisitions InnoGames and Kongregate.See it on page 8
04
The company is executing a structural reorganization that includes the planned spin-off of Nordic Entertainment Group into a separate listed entity.See it on page 3
05
Despite a net change in cash of -614 million SEK, the board proposed an increased annual dividend of SEK 12.50 per share.See it on page 27
06
Return on Capital Employed (ROCE) was 17%, reflecting a slight contraction from the 20% average observed over the previous five quarters.See it on page 25
07
The firm maintains a solid financial position with a net debt to EBITDA ratio of 1.4.See it on page 24

Summary

Modern Times Group achieved record financial performance during the first quarter of 2018, characterized by net sales of SEK 4,674 million and a 9.2% organic growth rate. This period marked a significant operational turnaround, highlighted by a 73% increase in operating income to SEK 237 million and a shift to profitability within the MTGx segment. The digital transformation strategy proved effective, as evidenced by an 88% surge in digital sales and a robust 32% rise in esports revenue, bolstered by the successful integration of recent acquisitions such as InnoGames and Kongregate.

The company’s strategic trajectory focuses on sharpening its core business model through the planned spin-off of the Nordic Entertainment Group into a separate listed entity. While the firm maintains a solid financial foundation with a net debt to EBITDA ratio of 1.4, it experienced a net change in cash of -614 million SEK. Furthermore, the Return on Capital Employed reached 17%, representing a slight contraction from the 20% observed over the preceding five quarters. Despite this minor fluctuation, the board remains committed to shareholder returns, proposing an increased annual dividend of SEK 12.50 per share.

These results underscore a successful pivot toward digital-first operations and esports, reflecting a broader industry trend of prioritizing high-growth digital segments over traditional media assets. By divesting non-core holdings and consolidating its digital gaming and esports portfolio, the organization aims to accelerate long-term value creation. The combination of strong organic growth and disciplined capital allocation positions the company to navigate its upcoming structural reorganization while maintaining its commitment to consistent dividend distributions.