Year-end report 2020: Svenska Spel strengthens operating margin despite closed operations

in Lottery

Svenska Spel reports continued good growth for two of three business areas with increased revenues for sports betting, number games and lotteries during the fourth quarter. The digital business is developing strongly and on the product side, the Group delivers improved gaming experiences as well as sales and sales records. However, the physical casinos are still closed, which has a major impact on the Group's total revenues and earnings. This is shown by Svenska Spel's year-end report for 2020, which is presented today.

- We have good profitability for the Group and strengthen the operating margin for both the quarter and the full year 2020, despite the fact that our physical casinos have been closed for three quarters. As in the previous quarter, revenues for our Sport & Casino and Tur business areas are increasing. This shows strength and stability that two out of three business areas deliver growth despite the fact that they are also affected by covid-19 in the form of temporary gaming responsibility measures and reduced sales in stores, says Patrik Hofbauer, President and CEO of Svenska Spel.

The Group's net gaming revenues for the fourth quarter are SEK 2,128 million, which is eight percent lower than the same quarter last year. This excludes a non-recurring income corresponding to the quarter last year, which provides a fairer comparison. Net gaming revenue for the Sport & Casino business area increased by ten percent compared with the same quarter last year, excluding non-recurring revenue, and the Tur business area increased by three percent. Business area Casino Cosmopol & Vegas decreases by 62 percent.

Operating profit of SEK 690 M (775) is a decrease compared with the same quarter last year. This is due to closed physical casinos and the fact that the Vegas vending machines continue to be affected by restrictions on restaurants as well as by the temporary gambling liability measures. Our physical casinos, including restaurant operations, thus report a sharply deteriorating operating profit of just over SEK 137 million. This is partially offset by lower operating costs, which results in a stronger operating margin of 32 percent (31).

For the full year 2020, net gaming revenues are SEK 7,674 M (8,579), a decrease of 11 percent and excluding non-recurring revenues last year a decrease of 9 percent. The result for the Group is SEK 1,874 M (2,716). This should be seen in the light of the fact that the result for 2019 has been affected by an item affecting comparability of SEK 676 million which referred to a deferred tax income.

The digital business is growing strongly and accounts for 48 percent (34) of the Group's revenues during the quarter and 46 percent (35) during the full year. The Tur business area breaks sales records online during the quarter.

The quarter contains several records. Stryktipset delivered record sales of SEK 49 million on the second day of Christmas. The Poker-SM was held with a top mark in the number of participants in the Main Event. In number games and tickets, records were broken in both the number of gift tickets sold and total digital sales of tickets. During the full year, Svenska Spel also distributed a record number of million winnings to the Swedish people, a total of 455 million winnings totaling more than SEK 1.8 billion.

In gaming responsibility, Svenska Spel has launched Spelkoll to help customers have even better control of their gaming. Spelkoll includes the tools that customers find when they log in, the new Spelkoll technology that keeps track of changed behavior in the risk zone for gambling problems, and care communicators who call customers for indications of risky gambling behavior.

Summary of the fourth quarter

  • Net gaming revenues for the Group amounted to SEK 2,128 M (2,476), a decrease of SEK 348 M or 14%. During the fourth quarter of 2019, a non-recurring income affected net gaming income by SEK 163 million. Closed physical casinos during the quarter had a negative impact on net gaming revenues corresponding to SEK 250 million. Excluding the casino operations1) and taking into account the income of a non-recurring nature last year, we have an increase in net gaming revenues of SEK 65 million or 3%.
  • Operating profit amounted to SEK 690 M (775), a decrease of SEK 85 M or 11%. Closed physical casinos have charged operating profit with SEK 121 million.
  • The result for the Group amounted to SEK 547 M (667), a decrease of SEK 120 M or 18%.
  • The operating margin was 32% (31). Significantly lower costs compensate for lower net gaming revenues.
  • During the quarter, we launched Spelkoll to help our customers keep track of their gambling.
  • SEK 25 million has been paid to 8,814 associations through our Gräsroten initiative. A total of SEK 45 million was paid out during 2020.
  • A new agreement has been signed with the Swedish Sports Confederation. The agreement runs for two years to a value of SEK 42 million.
  • A decision has been made to reorganize Casino Cosmopol, which will affect more than 200 employees.

Summary of the period January – December

  • Net gaming revenues for the Group amounted to SEK 7,674 M (8,579), a decrease of 11% or 9% excluding the 2019 revenue adjustment of SEK 163 M. Closed physical casinos during most of the period resulted in SEK 777 million in reduced net gaming revenues. Excluding the casino operations1) and taking into account the income of a non-recurring nature last year, we have an increase in net gaming revenues of SEK 34 million or 1%.
  • Operating profit for the Group amounted to SEK 2,395 M (2,466), a decrease of SEK 71 M or 3%. Closed physical casinos have charged operating profit with SEK 441 million.
  • The result for the Group amounted to SEK 1,874 M (2,716), a decrease of SEK 842 M or 31%.
  • The operating margin was 31% (29).
  • 455 million profits totaling SEK 1.8 billion were distributed during the year, a new record.
  • The Tur business area has launched a new variant of Triss with a profit - BilTriss.
  • The Sport & Casino business area has launched new games for trotting & galloping in collaboration with the French PMU (Pari Mutuel Urbain).
  • Svenska Spel's board has decided to wind up the casino operations in Sundsvall, which entails a non-recurring cost of SEK 81 million.

Here you can read Year-end report 2020

https://om.svenskaspel.se/koncernnyheter/bokslutskommunike-2020-svenska-spel-starker-rorelsemarginalen-trots-stangda-verksamheter/ .