Angry Birds Maker Rovio Looking to Sell Control of Hatch Unit

(Bloomberg) -- Rovio Entertainment Oyj, maker of the Angry Birds mobile games, fell after it reported declining profitability, and warned investors of lower profits for the first half of the year.

The company is prepared to cede control of subsidiary Hatch Entertainment, the cloud-based gaming service it currently owns 80 percent of, to less than 50 percent. Without Hatch, the Finnish company's profitability would improve to as much as 14 percent this year, it said in a statement Thursday.

Rovio is now looking for outside backing to fund the growth of the unit, after taking an investment from Japan's NTT Docomo Inc. earlier this month.

Shares slid as much as 10.4 percent as the exchange opened in Helsinki. About an hour and a half into trading, the stock pared losses to 3.5 percent as investors digested its fourth-quarter report.

Rovio said profitability is expected to decline this year to 9 percent to 11 percent of sales from 11.1 percent in 2018, and that most of the profit contribution would come in the second half of the year. The market remains “highly competitive,” the company said, adding that it will also spend roughly 30 percent of its Games unit revenue on luring users for its games this year -- or about as much as it did in 2018.

While last year saw no new game launches, a casual puzzle game Angry Birds Dream Blast had its debut in January, and the company's pipeline includes 13 new games in development for 2019-2021.

“We are this year aiming to launch at least two new games,” Chief Executive Officer Kati Levoranta said. “Our next game launch is likely to take place in the second half of the year.”

To contact the reporter on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Nate Lanxon, Giles Turner

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