Modern Times Group Q2 2018 Interim Report

Modern Times Group achieved record financial results in the second quarter of 2018, characterized by SEK 5,010 million in net sales and a 9.3 percent organic growth rate. This performance underscores a successful pivot toward digital and gaming-centric operations, evidenced by a 76 percent surge in digital sales and the attainment of profitability within the MTGx segment. Operating income before items affecting comparability rose to SEK 439 million, a 12 percent increase that highlights the efficacy of recent acquisitions, particularly InnoGames, in bolstering the company’s broader portfolio.

The group’s performance across its business segments remained bifurcated. While the MTGx division thrived with 24.9 percent organic sales growth fueled by robust esports activity and online gaming, the MTG Studios segment faced a 13.4 percent decline in organic sales. This downturn was primarily attributed to production delays and softening international demand, though the segment found some stability through growth in branded entertainment via Splay Networks. Despite these localized challenges, the company maintained a stable financial position with a net debt-to-EBITDA ratio of 1.3 and a return on capital employed of 17 percent.

Strategic efforts remain focused on the planned separation of the business into two distinct entities: Nordic Entertainment Group and the core MTG business. Although the proposed merger with TDC was terminated, the company continues to advance its structural reorganization. With a net income of SEK 348 million for the quarter and clear progress on governance objectives established at the 2018 Annual General Meeting, the organization is positioning itself to capitalize on its digital transformation while navigating the complexities of its impending corporate split.