Asmodee’s earnings up despite ongoing sales downturn, as board game giant prepares to unshackle from struggling Embracer video games operation

Board game giant Asmodee has seen its year-on-year sales figures slide for the second quarter in a row – but profits continue to rise at the company as it nears a spin-off from its troubled parent business Embracer Group.

Asmodee’s sales were down 6% between July and September compared to the same period last year, falling to about $250m – and were also down 5% year-on-year across the last six months of trading, the company’s latest interim report shows.

The company said its latest quarterly slide was impacted by its sale of Miniature Market, which it divested to a pair of long-serving Asmodee managers during Embracer Group’s massive cost-cutting programme last year.

Despite the ongoing sales fall Asmodee’s profits are up for the second quarter in a row, with its adjusted EBIT – a measure of profitability which removes one-off items – reaching about $63m for July to September.

Asmodee’s sales are also massively outperforming its video game, mobile and entertainment stablemates at Embracer, which saw quarterly sales drops of 46%, 8% and 10% respectively.

The board game business now accounts for more than 44% of Embracer’s quarterly sales, having overtaken Embracer’s core PC and console games business for net sales through the middle of last year.

Asmodee’s last quarter was a strong one for games published by its own studios, the report said, but that performance was negatively offset by sales of games published by its partners.

The company said early sell-in to resellers of Lego Monkey Palace and The Lord of the Rings: Duel for Middle Earth games, both officially released in the first days of Q3, showed “strong traction” in the
quarter.

It added that both titles created significant enthusiasm at last month’s SPIEL Essen board game fair, during which Asmodee says it delivered an astonishing 65,000 demos to attendees.

Embracer co-founder and group CEO Lars Wingefors highlighted future excitement for further games in partnership with Lego, beginning with the in-development Brick Like This! due for release next year, and the strong continued success of its Star Wars: Unlimited trading card game.

Asmodee’s position as the jewel in Embracer’s crown is set to be short lived, however, with plans continuing for the company to be spun off through a separate stock market listing on the Stockholm exchange by the end of March next year.

Embracer has said the move will allow the board game company to better focus on its core strategy and markets, as well as “quickly resume its value accretive M&A strategy”.

Asmodee, launched in 1995, spent a decade specialising in the French market before beginning to expand across Europe and internationally – a process which accelerated massively after the business was bought by private equity firm Eurazeo in 2014.

That acquisitions spree saw it swell to 22 separate studios, including Catan Studio, Days of Wonder, Fantasy Flight Games, Lookout Games and Z-Man Games.

But those acquisitions came to an end last summer after Embracer’s planned $2bn partnership deal with Saudi Arabia-based Savvy Games Group fell through, which left Asmodee’s parent company struggling under a $1.45bn debt pile.

That collapsed deal caused Embracer to launch a huge restructuring programme which saw it lay off about 1,400 people, shutter a string of video game studios and sell off big-name assets including Borderlands publisher Gearbox Interactive.

The board game division avoided large-scale job losses during the process, but in April Embracer announced it was loading Asmodee up with €900m of debt in order to pay down borrowing across the rest of its operations, before spinning off the business into an independent entity.

Asmodee’s new life as an independent business will be overseen by long-serving exec Thomas Koegler, who was named as its first new CEO in 12 years in September.

Embracer is holding a Capital Markets Day for Asmodee on November 19, where it is expected to provide more details about the company’s impending spin-off.