OPAP benefits from strong VLT and lottery performance in Q1

Greek gaming operator OPAP has reported a year-on-year increase in revenue and profit for the first quarter, primarily due to ongoing growth within its video lottery terminals (VLTs) and KINO lottery businesses.

Gross gaming revenue for the three months to March 31, 2019 totalled €396.0m (£350.5m/$444.9m), up 5.0% on €377.3m in the corresponding period last year.

Lottery remains the primary source of income for OPAP, with revenue in Q1 up 1.6% year-on-year to €191.7m. This represents 48.4% of total revenue during the period, which is slightly down on last year due to growth within the VLT business

VLT revenue jumped 58.9% from €43.4m to €68.9m, increasing its share of total revenue in Q1 from 11.5% last year to 17.4%. OPAP had 19,965 VLT machines in operation by the end of March.

However, it was not so good news for the betting business, with revenue slipping 5.3% to €101.7m, while instant and passives revenue also fell 10.8% to €33.7m.

OPAP was able to accompany this revenue increase by cutting operating costs by 4.9% from €67.4m in Q1 of 2018 to €64.1m. This was mainly due to a reduction in IT costs, which were down 41.3% year-on-year, helping push other operating expenses down 16.9% from €35.5m to €29.5m.

This offset a 10.1% rise in payroll expenses from €17.9m to €19.7m, due to increased staff headcount, as well as a 6.3% rise in marketing costs to €14.8m.

Higher revenue and lower overall costs in Q1 drove gross profit from gaming operations up 5.5% year-on-year to €156.1m. Earnings before interest, tax, depreciation and amortisation also climbed 28.0% from €87.2m to €111.6m, while net profit jumped 43.5% from €39.8m to €57.2m.

CEO Damian Cope praised the performances of the VLT and lottery businesses, and also highlighted improvement within its sports betting operations, despite its revenue slipping in Q1.

“It is clear that the various investments made during the last few years are now delivering solid returns and demonstrating OPAP’s ability to generate profitable growth,” he said. “We are also maintaining our close focus on operational excellence and continue to realise improvements and efficiencies in how we manage our business.”

Cope also provided an update on progress in the second quarter, saying trends remain similar and OPAP has made additional progress due to several product enhancements, including the launch of the largest pooled VLT jackpot in Europe.

In addition, Cope said OPAP expects to sign complete its €95m acquisition of a 51% stake in Stoiximan Group’s Greek and Cypriot operations in the near future.