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Full Year Report 2017: Modern Times Group

Key insights

7 takeaways

01
Modern Times Group achieved an 8% increase in organic sales and a 14% rise in operating income to SEK 1,264 million for the full year 2017.See it on page 20
02
The MTGx digital segment reached a critical milestone by recording its first quarterly operating profit in Q4 2017.See it on page 2
03
The company executed a major strategic pivot toward digital entertainment by acquiring InnoGames and Kongregate, while initiating the merger of its Nordic assets with TDC Group.See it on page 2
04
Total net sales reached SEK 17,537 million, supported by a divestment of Baltic operations that helped reduce net debt to SEK 1,812 million.See it on page 7
05
The firm increased its proposed dividend to SEK 12.50 per share, maintaining a net debt-to-EBITDA ratio of 1.1 despite a decline in Return on Capital Employed from 29% to 18%.See it on page 16
06
Digital video content sales grew by 26%, though this was partially offset by an impairment charge related to the subsidiary Zoomin.TV.See it on page 9
07
Portfolio restructuring included further gaming studio investments in Synapse Games and Chinzilla to strengthen the company's focus on esports and online gaming.See it on page 2

Summary

Modern Times Group concluded 2017 with a robust financial performance, characterized by an 8% increase in full-year organic sales and a 14% rise in operating income to SEK 1,264 million. This growth trajectory was underpinned by the rapid expansion of the MTGx digital segment, which achieved its first quarterly operating profit during the final quarter of the year. The company’s strategic pivot toward becoming a pure-play digital entertainment firm was further solidified by the integration of online gaming entities InnoGames and Kongregate, alongside the planned merger of its Nordic entertainment assets with TDC Group.

The company’s financial health remained stable throughout the year, with total net sales reaching SEK 17,537 million. Liquidity was bolstered by the divestment of Baltic operations, allowing for a reduction in net debt to SEK 1,812 million and a favorable net debt-to-EBITDA ratio of 1.1. While the organization faced challenges, including a 26% increase in digital video content sales offset by an impairment for Zoomin.TV and a decline in Return on Capital Employed from 29% to 18%, the overall fiscal position supported a proposed dividend increase to SEK 12.50 per share.

Spanning global digital markets with a focus on esports and online gaming, the 2017 results reflect a transitional period defined by aggressive portfolio restructuring. By prioritizing digital-first acquisitions and divesting traditional broadcast assets, the firm successfully navigated a shift in its business model. These efforts, combined with disciplined capital management and strategic investments in gaming studios like Synapse Games and Chinzilla, position the organization to capitalize on evolving consumer demand within the digital entertainment landscape.