Embracer Group reported in late Wednesday evening with its earnings report for Q2 2023. The news is largely positive for the entertainment monolith, as Embracer reported a 47 percent increase in sales from this point a year ago. That's mainly coming from the company's PC and console gaming division led by heavily-anticipated sequel Dead Island 2.
"In Q1, we achieved organic growth of 20 % and Adjusted EBIT of SEK 1.7 billion," reads the Embracer Group Q2 2023 earnings report statement from company CEO Lars Wingefors. "In recent months, we have released two successful sequels, Dead Island 2 and Remnant II. We now have increased confidence regarding earnings this year and we are on track to deliver on the restructuring program announced on June 13, 2023, with a series of initial actions now taken. Even though it’s a challenging time for everyone impacted, I am confident we will emerge a stronger company."
It should be noted that these positive earnings come in the wake of Embracer Group's restructuring plan, which involved substantial layoffs and studio closures. That came as a result of a major $2 billion USD deal that collapsed earlier this year. Wingefors did address the restructuring plan in Wednesday's earnings report:
We are making good progress on the restructuring program. We are tracking towards the targets, including reducing capex by at least SEK 2.9 billion and overhead costs by at least SEK 0.8 billion by FY 2024/25, as well as reaching a financial net debt below SEK 8 billion by the end of this financial year. Initial actions have been taken on closure and other initiatives to reduce the number of projects and studios and overhead savings initiatives have been defined in co-ordination with the Operative Groups. In addition, we have set a high priority on increasing external funding of certain larger projects and potential divestment opportunities.
With a series of initial actions now taken, we expect further savings after the completion of a global review of the existing pipeline, which is currently ongoing. This review will guide our capital allocation to optimize return on investment.
The purpose of the program is to operate with efficiency across the group and to reduce business risk in the short-term. This, in turn, will enable us to continue to grow and to deliver high-quality products in the longterm. A painful consequence of the program is that a number of talented and passionate team members have left us, or will be leaving us before the end of the financial year. We understand and respect that this is a challenging time for everyone impacted. Where we can, we will try to provide opportunities for our colleagues to transition onto other projects. Throughout the program, we are working to ensure that everyone affected receives information first.
Embracer Group is anticipating a strong quarter ahead, led mainly by Remnant 2, with Wingefors pointing to its 1 million sales in its first four days after release. The company is also anticipating strong slates from publishers THQ Nordic and Gearbox, as well as developers Crystal Dynamics and Eidos. THQ Nordic, specifically, laid out its year ahead with its THQ Nordic Digital Showcase.
We'll continue to watch for news coming out of Embracer Group and its many subsidiaries. Its Q2 2023 webcast discussing the latest earnings is expected to take place late Wednesday evening/early Thursday morning. For more market news, keep it on Shacknews.
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