Veikkaus Q3 profits up despite revenue decline

Finland’s state-owned gambling operator Veikkaus said operational efficiencies enabled it to record a lift in profits despite a fall in revenues.

In its interim report, Veikkaus said turnover for the three months to 30 September was down 0.7% to €733.9m, continuing a trend that has seen it drop 4.1% to €2.23bn for the year to date.

Gross gaming revenue of €422.8m was down 0.9% year-on-year during the quarter, and down 2.1% to €1.27bn for the year to date.

The operator said net sales decreased in almost all segments in the nine-month period, however lottery net sales of €267.4m were up by 6.7% thanks to several record-breaking weeks in the early part of the year.

Some 57.1% of net sales came from physical outlets and 42.9% from the digital channel. Veikkaus said competition in the online sphere from unlicensed foreign gaming companies was a significant factor in its decrease in overall sales.

While revenue has decreased Veikkaus said it was pleased with several indicators relating to responsible gambling. The percentage of identifiable customers within all gaming has increased to 45.2% (up 0.4 percentage points) so far this year. In September, Veikkaus introduced the possibility for gaming machines to authenticate via mobile devices.

In Q3, expenses were down 4.2% to €52.0m. Total expenses decreased in January-September by 8.4% compared to the corresponding period of the previous year. Veikkaus said this was influenced by a reduction of non-recurring integration costs, reduction of marketing costs and overall cost effectiveness.

For the nine months to 30 September, customers were paid €963.3 million in gaming profits, down 6.7% on the previous year, while the operator paid €151.8 in lottery tax to the state, a drop of 2.1%.

Veikkaus registered a profit of €260.8m in Q3 which was up 5.6% year-on-year. So for the year to 30 September, it has made a profit of €762.2m – up 1.3% year-on-year.

“Working in a cost-effective way, we've been able to keep the profits from starting the year at last year's level,” said Veikkaus' president and CEO, Olli Sarekoski.

“Veikkaus needs to ensure its ability to perform in the middle of a changing operating environment, irrespective of the decisions that are made regarding the Finnish Gaming system. The changes in the operating environment entail that Veikkaus must focus more and more strongly on the digital channel. In online gaming, Veikkaus currently doesn't have a genuine Monopoly, but we are competing against foreign gaming operators.”