“Our overruling principle is to always maximize shareholder value in any given situation.”
“As part of the restructuring program, Embracer still has a few larger structured divestment processes ongoing that could strengthen our balance sheet and further reduce [capital expenditure],” Wingefors noted. “Processes are in mature stages.”
It’s possible that “restructuring” measures might happen before they’re announced. “Certain companies might initiate restructuring before any divestment is announced,” the CEO continued. “Our overruling principle is to always maximize shareholder value in any given situation.” Embracer are “unlikely to reach the restructuring program target of below SEK 8 billion in net debt by March 31,” Wingefors added; in other words, it will spill over into Embracer’s next fiscal year. A little more specifically, Wingefors said that “while we have seen solid delivery across three out of our four segments throughout the year, there is room for further improvements of our financial performance, primarily within PC/Console.”
Wingefors added that “the reductions are managed locally on the operative group level with a focus on informing affected employees first, and then carried out with compassion, respect and integrity towards those affected.” I’m not sure theFree RadicalandNew World Interactivestaff who got laid off in the run-up to Christmas last year would agree.
Embracer’s financial woes followa spree of studio and license acquisitionsover the course of the pandemic. In the earning results, Wingefors also offered thoughts on how Embracer will be more “selective” with their investments in future. Apparently, all the layoffs and closures have been really educational.
“Importantly, the structure and content of an updated group-wide capital allocation process is in production,” he said. “Knowledge gained through the cross-functional and cross-operative group restructuring project forms the base. Business leaders from different areas of the organization are contributing with their vast experience and knowledge, which coupled with a clear and simple game investment greenlighting model lays the foundation for increased future cash flow return on investment.
“While we will still do third-party publishing in the future, we will be considerably more selective,” Wingefors went on. “Our future games portfolio will be more focused around established, owned IPs and studios which we are confident will generate better predictability as well as increased [return on investment] and profitability going forward.”
