The firm Embracer of ‘The Lord of the Rings’ sees its income fall by 10% in the second quarter

hugging groupthe Sweden-based company that owns the rights to the the lord of the rings franchise, has recorded a drop in entertainment net sales of 10% in the second quarter in a “slow” period that should accelerate next month.

The company’s Entertainment and Services net sales during the July-September period were 1.25 billion Swedish crowns ($113.16 million), less than the same period last year.

Overall, the company posted a net sales decline of 21% to SEK 8.55 billion, with PC/console gaming, mobile gaming and board gaming units also seeing declines. Adjusted EBIT fell 33% from SEK 1.81 billion last year to SEK 1.21 billion this time.

Embracer, which bought the rights to Middle-Earth Enterprises from The Saul Zaentz Comapany in August 2022, said its entertainment division “had another slow quarter, largely as expected,” as few films from other titles were released. . However, he noted “increasing anticipation” surrounding the anime film’s release. The Lord of the Rings: War of the Rohirrim on December 13, which should lead to a stronger third quarter and help drive “notable earnings growth year after year.”

The company is currently in the process of spinning off its assets into three companies, which will be divided The Lord of the Rings, the hobbit and other IPs in your own repository. Embracer has also laid off a large number of staff and cut costs, as it seeks a more stable footing.

“Over the past 15 months, we have created a stronger foundation for long-term value creation, reducing our net debt and our capital expenditure,” said Lars Wingefors, co-founder and CEO of Embracer. “We have many efficient, high-performing companies, several with industry-leading margins.

“However, we recognize that parts of our PC/Console and Entertainment & Services segments are still underperforming due to delays and low return on investment (ROI) for primarily small and medium-sized releases. Combined with fixed operating costs, this creates unacceptable margins which we are firmly addressing ahead of spin-offs.”

Embracer also announced this morning that it will sell its Easybrain mobile gaming business to Miniclip for $1.2 billion in cash. This will allow Embracer to eliminate a large portion of its net debt, which will fall from SEK 13.2 billion to approximately SEK 500 million pro forma.