‘Restructuring’ has started at Asmodee as owner Embracer Group battles to cut $1.4bn debt pile

Asmodee’s owner Embracer Group has confirmed it has begun “restructuring” at the tabletop gaming giant, as part of a massive cost-cutting programme which has already seen Embracer shed more than 900 jobs.

Embracer revealed in June that it was shifting from “heavy-investment mode” to become “a highly cash-flow generative business this year”, putting an end to a years-long acquisition spree by the former video game and mobile gaming specialist which included the €2.75bn takeover of Asmodee in 2021.

Its cuts so far have predominantly hit the group’s PC and Console Games unit, with 15 game projects scrapped and a swathe of studios being shuttered, as well as 5% of Embracer’s total workforce being let go.

But Asmodee CFO Müge Bouillon, who is deeply involved in managing the restructuring programme as the project’s finance workstream lead, has now confirmed the restructuring programme has started at the tabletop game business.

Bouillon said the firm had put in place “a comprehensive monitoring which allows us to track the realisation of savings”.

Her comments came in a Q&A session during Embracer’s financial results presentation for Q2 of the 2023/24 financial year, covering the period between July and September. Those results confirmed Asmodee as the company’s biggest driver of net sales in the quarter, outstripping the ailing PC and Console games arm as well as the mobile games and entertainment and services units.

Asmodee’s net sales soared 25% in the quarter to just over SEK4bn ($389m), while the PC/console games segment saw net sales fall 5% to about SEK3.9bn ($372m). Asmodee’s Q2 EBIT – its profitability, minus interest, taxes and some one-off costs – was SEK407m ($39m), up from about $10m year-on-year, while the PC/Console business made a $120.5m EBIT loss in Q2.

That is a huge moment for Asmodee, underlining the importance and profitability of board games to Embracer compared to its previous core specialism of video gaming – which includes franchises such as Tomb Raider, Borderlands, Metro Exodus, Saints Row and Dead Island.

Growth was once again driven by the trading cards games product category, with low single-digit growth for board games, Embracer co-founder and group CEO Lars Wingefors said during the Q2 results presentation. He added that growth in Europe outperformed growth in the US during the quarter.

Wingefors also noted that Asmodee managed to generate positive free cash flow for the quarter, driven by a lower inventory build-up in line with its action plan announced 12 months ago.

Asmodee typically builds up larger stocks of inventory in financial Q2 in preparation for its “peak season”, including the run-up to Christmas, taking a hit to its free cash flow in the process.

That leaves questions marks about whether Asmodee will have maintained high enough stock levels to cover its seasonally strongest period.

Asmodee Group CFO Müge Bouillon said, “I’m very happy with the performance of Asmodee. September itself is an important peak season period for us, and the implemenation of restructuring programme has started also at Asmodee, so the good performance is the combination of both the current trading, the operational performance and the proper executiong of the plan.

“So it was important for us, we don’t take it lightly, so we are on track and we aim at delivering our fiscal year and run rate targets.”

A spokesperson for Asmodee has since contacted BoardGameWire with the following statement.

“Asmodee is actively supporting its parent company, Embracer, in achieving cost-savings targets.

“However, it’s crucial to note that Asmodee’s participation in the group’s restructuring plan does not necessitate nor will it result in any disruptive changes.

“Our publishing and distribution activities remain unaffected. We want to emphasize that Asmodee continues to be a robust global leader in the board games industry, with a firm commitment to our employees, partners, and players.”

Asmodee distributes trading card games such as Pokemon, Magic, Yu-Gi-Oh!, as well as publishing board games under 22 subsidiaries including Catan Studio, Days of Wonder, Fantasy Flight Games, Lookout Games and Z-Men Games.

Its biggest IPs include Ticket to Ride, Catan, Splendor, 7 Wonders, Azul, Exploding Kittens, Dobble/Spot It! and Star Wars: Legion.

Wingefors added that in there was excitement building for the company’s anticipated new trading card game Star Wars Unlimited, which is scheduled to be released on March 8 next year.

He also highlighted new releases including Ticket to Ride Legacy and the new edition of miniatures game Marvel Crisis Protocol.