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Angry Birds developer Rovio's shares up more than 10% after strong Q3 results
ROVIO Entertainment, the maker of the Angry Birds mobile game, on Friday reported higher third-quarter profits that sent its shares up more than 10 per cent, but the company also said it needed new games to drive growth.
Rovio, which listed in Helsinki in September 2017, has been hit by its high dependency on the Angry Birds brand, first launched in 2009, and tough competition. The group's shares dropped 50 per cent in February after Rovio said sales could fall this year after 55 per cent growth in 2017.
"It is clear that we need new games in order to accelerate growth," Rovio's chief executive Kati Levoranta said in a statement, adding that the company planned to launch at least two new games next year and had another 10 projects in the pipeline.
Rovio expanded into film with an Angry Birds movie in 2016, which earned about US$350 million at the box office, and expects a movie sequel to boost business next year.
The company has also stepped up investments in its 80 per cent-owned spinoff company Hatch, which is building a Netflix-style streaming service for mobile games.
The company said Hatch had now left beta phase and was recently publicly released in the Nordic countries, Britain and Ireland.
OP Bank analyst Hannu Rauhala said the news about Hatch entering commercial production was a positive sign.
"Now there are hopes that at some point it will start creating revenue, reducing its current negative impact on profit," said Mr Rauhala, who has a "buy" rating on the stock.
"The result was good but it should be remembered that in the game industry the variation between quarters can be significant," he added.
The Finnish company reported third-quarter adjusted operating profit of 10.4 million euros (S$16.2 million), up from four million euros a year ago.
The rise in quarterly profit was mainly due to reduced marketing costs and growth from Rovio's most popular game, Angry Birds 2, which increased its gross bookings 68 per cent to 30.8 million euros year-on-year.
But looking ahead, Rovio said tough competition and high marketing costs would put pressure on its full-year outlook.
The group said it expected 2018 sales to be between 280 and 290 million euros, compared with a previous range of 260 and 300 million euros. Last year, the company had revenues of 297 million euros.
The company sees its full-year core operating profit margin at 10 to 11 per cent, up from a previous view of 9 to 11 per cent. REUTERS