Angry Birds maker Rovio gains ground as profits rise

FILE PHOTO: Angry Birds characters Bomb, Chuck and Red are pictured during the Angry Birds movie premiere in Helsinki, Finland, May 11, 2016. REUTERS/Tuomas Forsell/File Photo

HELSINKI (Reuters) – Rovio Entertainment, the maker of the “Angry Birds” mobile games and movie, posted better than expected quarterly profit on Thursday, representing a fillip to investor confidence dented by a dramatic profit warning in February.

The Finnish company’s recent troubles have stemmed from tough competition and increased user-acquisition costs, as well as high dependency on the Angry Birds brand that was first launched as a mobile game in 2009.

However, adjusted operating profit in the first quarter of 2018 roughly doubled year on year to 10 million euros ($12 million), with Rovio citing growth in its top games and lower marketing costs.

Sales, meanwhile, were down 1 percent at 66 million euros on declining revenue from its 2016 Hollywood movie.

Shares in Rovio, which listed last September, rose 5.6 percent on the news, recovering a some of the 50 percent decline after the February profit warning.

“Quarterly projections are difficult for the gaming companies as costs may fluctuate significantly between quarters,” said OP Bank analyst Hannu Rauhala, who has a “buy” rating on the stock.

“But the report nevertheless shows some stability in their performance, which strengthens confidence.”

Rovio reiterated the full-year outlook that had disappointed investors in February, when it said that sales could fall this year after jumping 55 percent in 2017.

In the past months Rovio has announced the departures of its head of games and its investor relations chief while cutting the pay of its chairman and vice chairman.

Rovio expects a movie sequel to boost business next year and the company has also stepped up investments in its spin-off company Hatch, which is building a Netflix-style streaming service for mobile games.

(Reporting by Jussi Rosendahl; Editing by David Goodman)