Tomb Raider games group Embracer lags forecast, maintains outlook

Swedish games developer Embracer reported slightly weaker than expected operating profit for the April to June period but reiterated its full-year guidance, stating that its restructuring programme was on track.

Shares initially rose by around 8%, but almost immediately reversed and were flat at 0812 GMT.

Adjusted operating profit for the fiscal first quarter stood at 1.67 billion Swedish crowns ($152.75 million), lagging the 1.78 billion expected in a company-provided poll of analysts, but up from 1.32 billion crowns a year ago.

“We now have increased confidence regarding earnings this year and we are on track to deliver on the restructuring programme,” CEO Lars Wingefors said in a statement.

Wingefors mentioned that operating costs increased due to inflation and the impact of hiring last year, which had been partially offset by restructuring.

After experiencing a boost linked to COVID-19 lockdowns that drove demand for gaming, the company has had a difficult year with development delays and a poor reception for some of its new games.

In addition, a $2 billion partnership that the company had referred to as “ground-breaking” fell through in May, causing the company’s shares to decline by 45%.

Last year, the company acquired several development studios and the intellectual property rights to a new Tomb Raider edition as well as Lord of The Rings games.

Redeye analyst Viktor Lindstrom stated that licensing revenues from Lord of the Rings had contributed to stronger sales than expected.

Analysts also noted that the company had made progress towards its financial targets and expected improved free cash flow in the second quarter.

($1 = 10.9332 Swedish crowns)

(Reporting by Jesus Calero and Marie Mannes; Editing by Terje Solsvik, Edmund Klamann and Barbara Lewis)