Veikkaus profit steady in first half despite 13.2% revenue decline

| By Robert Fletcher
Net profit at Veikkaus remained level at €330.2m (£283.1m/$390.6m) for the first half of its 2021 financial year despite the Finnish state-owned operator reporting a 13.2% year-on-year decline in revenue.

Revenue for the six months to 30 June amounted to €527.1m, down from €607.2m in the corresponding period last year.

Veikkaus put this decline down to the impact of the novel coronavirus (Covid-19) pandemic, explaining that its slot machines and gaming arcades were closed for almost four months of the half, whereas last year the facilities remained open until mid-March until closing due to Covid-19.

The operator estimated that Covid-19 restrictions and the subsequent closure of its gaming facilities had a negative impact of €150.0m on its margin for the first half of 2021.

Lottery games remained the primary source of income for Veikkaus, with revenue for this part of the business amounting to €316.6m, down 4.3% on last year but representing 60.0% of total revenue for the period.

Casino games revenue was down 38.5% year-on-year to €134.2m, accounting for 25.5% of all revenue in the half, while the other 14.5% came from sports betting revenue, which was up 31.4% to €76.2m as a result of major sports events including the Uefa Euro 2020 national football team tournament.

Veikkaus also noted that of the total €527.1m in revenue generated in the half, 55% of this came from its online operations, while the other 45% was from retail channels.

In terms of costs, total spend for the half was down 28.6% to €57.3m, which was helped by a 30.3% reduction in sales commissions and location fees from €55.9m to €39.0m.

The operator also reported €41.2m in employee benefits expenses, as well as €29.6m worth of service costs, €18.5m in depreciation and impairment spending and €22.7m in other operating costs.

Lottery tax was 60.5% lower at €28.8m, though this was primarily due to the government reducing the lottery tax rate from 12% to 5.5% for the 2021 calendar year in an effort to help operators through the Covid-19 crisis.

As such, Veikkaus ended the first half with a net profit of €330.2m, only marginally down from €332.7m last year.

The state of emergency caused by the corona pandemic has continued around the world for more than a year and has also had a major impact on Veikkaus’ operations,” Veikkaus chief executive Olli Sarekoski said. 

“Despite the pandemic, we were able to take significant concrete steps in building a more responsible gaming environment during the early part of the year.”

This included Veikkaus in January pushing ahead with plans for new responsible gambling rules. Customers wanting to play slot machines in stores, kiosks, restaurants and service stations must first authenticate themselves and set a loss limit.

Veikkaus in May last year was forced to introduce the measure for online customers in line with a decree from the Finnish Ministry of the Interior, aimed at reducing players’ losses during the novel coronavirus (Covid-19) pandemic.

The measure was initially seen as temporary but after the requirement was extended on a number of occasions, the government in June this year made loss limits permanent, with players limited to losing €500 (£428/$587) each day while playing online casino games with Veikkaus and €2,000 each month.

This was extended to Veikkaus gaming arcades from July, while the operator last week also introduced loss limits for its online games

Full authentication has major benefits not only for the prevention of gambling-related harm but also for age limit controls, crime prevention, and the development of business operations that are even more sustainable,” Veikkaus chief financial officer Regina Sippel said.

“It is our goal to make sustainability our success factor for the future and to turn into a leading expert of sustainability in the gaming business.”

Veikkaus also referenced its recent announcement regarding it opening negotiations with 830 staff members as it intends to make up to 200 redundancies, in order to “secure the continuity of [its] operations.” This could also see the roles of 350 staff at the business change materially.

“Veikkaus’ operating environment and business volume have undergone profound changes in the past few years,” Veikkaus said. “To continue to perform successfully in the future, Veikkaus strives to adapt its operations, making them more efficient so that they would meet the demands of the changing operating environment.”

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