VLTs drive revenue growth at OPAP in first half

Strong growth in revenue from OPAP's video lottery terminal division has helped the Greek lottery and gaming operator report a year-on-year increase in revenue for the first half of the year, as well as offsetting a decline in sports betting revenue.

Gross gaming revenue for the six months to June 30, 2019 amounted to €779.6m (£696.5m/$858.9m), 5.7% up from the €737.5m reported for the corresponding period last year.

Lottery remains, by some margin, the primary source of income for OPAP, with this segment generating €379.3m in revenue during the first half, up 2.1% from €371.5m last year. Lottery was responsible for 48.7% of overall revenue in the period.

However the VLTs business was the standout performer in H1, with revenue rising 56.5% year-on-year from €89.4m to €139.9m. As a result, this boosted its share of group revenue from 12.1% to 17.9%, with OPAP operating 20,035 machines across 365 gaming halls and 1,952 of its stores.

This helped offset a weaker performance from sports betting, where revenue fell 5.2% from €202.4m to €191.9m. Instant and passive game revenue also slipped 7.6% from €74.2m to €68.5m.

Alongside an overall increase in gross gaming revenue, OPAP was also able to cut costs in the first half, with operating expenses down from €147.1m to €138.4m.

Marketing costs were reduced by 8.8% from €34.4m to €31.8m, while other operating expenses were also slashed by 13.0% from €74.3m to €64.6m during the period.

However, OPAP did see payroll costs climb 10.6% from €38.4m to €42.4m. The operator said this was partly the result of a one-off cost of €2.8m linked with a small scale voluntary departure scheme, although this is expected to have a positive impact on overall payroll costs during the coming quarters.

Higher revenue and lower costs boosted earnings for OPAP in the period, with gross profit from gaming operations rising 7.0% year-on-year from €288.1m to €308.4m.

Earnings before interest, tax, depreciation and amortisation (EBITDA) was also up 26.2% from €157.4m to €198.7m, while net profit jumped 39.0% from €66.3m to €91.8m.

“The OPAP team has delivered a solid performance in the first half of 2019 and we all believe we are well placed to sustain this momentum for the rest of 2019 and successfully fulfil our targets for the year,” OPAP’s chief executive, Damian Cope, said.

Cope also praised the operator’s performance in the second quarter, during which revenue increased by 6.5% year-on-year to €383.6m, again mainly as a result of growth within the VLT business.

Gross profit from gaming operations in the three months to June 30, 2019 was also up 8.6% to €152.3m, while EBITDA increased 28.0% on a like-for-like basis to €87.0m and net profit climbed 39.9% to €26.2m.

“The delivery of our 2020 Vision, and the transformation of OPAP into a world class gaming entertainment company, continues apace with further improvements being seen across every part of our business,” Cope said.

“Online remains a key area of focus as we further develop our dual strategy, via OPAP Online and our investment in Stoiximan Group. We are seeing good growth in the customer bases of both operations and are confident that we will continue to see growth from both businesses for some time to come.”

OPAP is currently the subject of a €2.06bn takeover offer by Czech gaming and lottery giant Sazka Group. The bid was lodged in July, but it is not yet clear when a deal could be finalised.

Also in July, OPAP moved to further strengthen its lottery arm by signing a binding Memorandum of Understanding to buy Intralot’s stake in the Hellenic Lotteries business for a total cost of €20m.