Sazka GGR up 29.9% in Q1 2021 despite retail closures

| By Conor Mulheir
Czech lottery giant Sazka Group has released its financial results for the first quarter of 2021, showing gross gaming revenue (GGR) of €526.3m (£452.4m/$637.7m), up 29.9% on Q1 2020.
Bally's post revenue increase for Q1 2021

The company reported €257.4m in GGR from the Austrian market, down 16.7% from the previous year, however the share generated by Austrian Lotteries, at €255.0m, was up 23.6%.

Sazka said this was due to a strong performance in lotteries and igaming in the market, but there was almost zero contribution from the Austrian and international casinos, de to novel coronavirus (Covid-19)-related closures..

The Czech market brought in €95.7m in GGR, up 24.3%, while Greece and Cyprus generated €174.2m, down 46.9%, which the company said reflects the closure of its retail activities in these markets during much of the quarter.

Sazka’s contracts with customers in Italy brought in a further €134.3m in revenue, up from €102.8m in the previous year. This was not included in GGR, however.

After paying gaming taxes, the business recorded net gaming revenue for the period of €283.0m, up 6.1% from Q1 2020, and brought in a further €27.2m from non-gaming activities, down 2.9%, while recording €82.0m in other operating income, up significantly from €12.1m.

Expenses relating to materials, consumables and services came in at €89.2m, up 34.3% year-on-year, while personnel expenses were the next biggest cost at €78.2m, up 212.8%.

Agents’ commissions cost the business a further €51.4m, down 40.9%, while marketing services and other operating expenses came in at €41.2m and €18.6m, respectively.

This left Sazka with operating earnings before interest, tax, depreciation and amortisation (EBITDA) of €132.6m, up 20.3% from €110.2m in Q1 2020.

After adjustments for inorganic business development costs of €4.6m, adjustments in the Greece and Cyprus segment due to novel coronavirus (Covid-19) of €6.9m and other adjustments of €300,000, the business recorded adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of €144.4m, up 4.3%.

Depreciation and amortisation cost the business €51.7m, compared to €28.8m in the previous year, while the impairment of non-financial assets cost a further €3.8m, and the company suffered other losses of €500,000. This left a profit from operating activities of €76.6m, down slightly from €77.4m.

Sazka generated interest income of €1.4m, but lost €28.7m in interest expenses, while paying a further €1.2m in other finance expenses for a total finance cost of €28.5m.

This left a profit before income tax of €48.1m, up 10.8%. After paying income tax of €12.9m, 32.1% lower than the figure paid in Q1 2020, the business was left with a profit after tax of €35.2m, up 44.3% on Q1 2020’s profit after tax of €24.4m.

Sazka said the growth in its revenues and profits was driven by the consolidation of Casinos Austria AG, following Sazka’s acquisition of a controlling stake in the business from June 2020, and also by the consolidation of Stoiximan from November 2020.

“Overall, I am very pleased with SAZKA Group’s continuing strong performance in Q1 2021,” said Sazka Group’s chief executive, Robert Chvatal.

“I look forward to a great year as our strong trading momentum persists, our impacted businesses in Greece and Austria return to normal conditions, and we continue to make progress on our strategic objectives.”

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