Fortuna Drops Most Since June as Earnings Miss Estimates

Fortuna Entertainment Group NV (FORTUNA), an eastern European betting company, fell the most in 11 weeks in Prague trading after reporting first-half profit that missed analysts’ estimates.

Fortuna dropped as much as 3.7 koruna, or 4 percent to 89.3 koruna, its biggest intraday drop since June 6, and traded at 90.2 koruna as of 12:07 p.m. in Prague.

Net income the first-half declined 35 percent to 5.62 million euros, Fortuna said today in a statement. Ebitda, or earnings before interest, tax, depreciation and amortization declined 15 percent to 10.1 million euros.

“Compared to our projection Ebitda is lower due to higher operating costs,” J&T Banka AS’ analyst Milan Lavicka wrote in a note to clients. “The lottery and higher costs are disappointing. Overall, we consider the results negative.” Lavicka recommends investors “buy” the stock.

Fortuna, which started a lottery project in the Czech Republic last year, is battling for market share with its biggest rival Sazka AS, a former state monopoly now run by financial groups PPF AS and KKCG. The lottery project posted an operating loss of 3.3 million euros in the first half of 2012, the company said today.

Fortuna’s gross win for the period advanced 15 percent to 55 million euros helped by the Euro 2012 soccer tournament.

Fortuna, which is controlled by Czech-Slovak private equity Penta Investments Ltd., provides online betting services and operates branches in the Czech Republic, Slovakia and Poland.

To contact the reporter on this story: Lenka Ponikelska in Prague at lponikelska1@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net