FDJ hails post-lockdown recovery despite H1 revenue decline

La Française des Jeux (FDJ) said a strong performance after France emerged from its novel coronavirus (Covid-19) lockdown has reduced a decline in revenue for the first half of the operator’s financial year.

The operator saw amounts wagered over the six months to 30 June fall 18.4% year-on-year to €6.90bn (£6.25bn/$8.11bn). Revenue for the period was down 10.1% at €849m.

It noted that until France went into lockdown on 16 March, stakes had been up 5% year-on-year, before dropping 60% over next two months.

However, since the French government began lifting the lockdown from 11 May, FDJ said it began to see a gradual recovery. This was then accelerated with the resumption of sporting competitions and the resumption of its Amigo lottery game on 8 June.

As such, the H1 stakes decline was significantly reduced, and stakes returned to 2019 levels by mid-June.

Lottery games still accounted for the majority of stakes despite its contribution falling 12.6% to €5.78bn, of which €3.56bn came from instant win games (down 11.3%). Draw-based games, meanwhile, saw stakes fall 14.6% to €2.22bn. If Amigo’s contribution was removed from stakes, draw-based sales would have only declined 1.7%.

For sports betting – for which figures were adjusted to reflect the contribution from Sporting Group, acquired in June 2019 – stakes were down 38.8% at €1.11bn, in a period where the sporting calendar was almost wiped out by Covid-19. France’s 2019-20 football season was also ended prematurely in April, with no league action to take place until September.

This served to drag down online’s contribution to stakes, which fell 15.8% to €1.39bn, though FDJ noted that online lottery stakes enjoyed strong momentum in the half-year period, rising around 50% to €500m. This was dwarfed by retail stakes, however, which contributed €6.27bn, down 20.8% year-on-year.

Across all verticals and channels, players won €4.65bn, down 19.3% and equating to a payout ratio of 67.3%. After winnings, FDJ’s gross gaming revenue for the six month period was down 15.4% at €2.25bn.

This broke down to GGR of €1.95bn from lottery, down 13.2%, and €298m from sports betting, down 26.1%. B2B sports betting solutions brought in a further €6m.

After duties and fees of €1.43bn, net revenue for H1 fell 14.7% to €829m. This was increased by €20m, thanks to its payments and entertainment businesses, for total half-year revenue of €849m, down 10.1%.

While earnings declined sharply, FDJ noted that a cost-saving plan, to ultimately reduce outgoings by €80m in 2020, helping to keep the operator earning before interest, depreciation and tax margin about 20%, at 20.5%. EBITDA for the period declined 16.4% to €174m.

The cost reduction plan helped reduce operating expenses by 12.% to €725m, with the biggest decline seen in cost of sales, which fell 17.6% to €482m. Marketing and communication expenses amounted to €147m, while general and administrative expenses came in at €87m.

After costs, operating profit was down 8.9% to €124m. FDJ also incurred €30.3m in non-recurring expenses, reducing the operating profit to €94m, down 27.2%. After financial expenses of €5.2m, pre-tax profit was down 36.5% at €89m, with net profit for H1 down 47.7% at €50m after income tax of €39m.

“The group’s strong mobilisation from the onset of the health crisis and a swiftly implemented cost-cutting plan have limited the impact on the first-half results,” FDJ chief executive Stéphane Pallez said.

“From mid-June, we have been recording stakes at a level comparable with that of 2019,” she said. “Our strategic orientations and the strength of the FDJ model have been confirmed, and we continue to invest to support the development of all our activities.”