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Geographical spread and cost control provide profitability despite market challenges

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Quarter April – June 2019

  • Group revenue was SEK 1,277.7 (1,346.4) million, a decrease of 5 percent with an organic decrease of 4 percent.
  • Casino revenue declined by 10 percent and Sportsbook revenue grew by 14 percent, with a sportsbook margin of 7.8 (6.3) percent.
  • Operating income (EBIT) was SEK 196.9 (300.7) million, equivalent to an EBIT margin of 15.4 (22.3) percent.
  • The underlying EBIT (adjusted for a SEK 19 million fine) was SEK 215.9 million, equivalent to a margin of 16.9 percent.
  • Operating cash flow amounted to 390.6 (271.2), an increase of 44 percent.

Period January – June 2019

  • Group revenue was SEK 2,608.3 (2,556.4) million, an increase of 2 percent with an organic growth of 1 percent.
  • Operating income (EBIT) was SEK 452.1 (512.1) million, a decrease of 12 percent.
  • Net income was SEK 400.9 (459.4) million, corresponding to SEK 2.90 (3.32) per share.
  • Operating cash flow amounted to SEK 605.1 (583.3) million.
  • SEK 538.4 million was distributed to shareholders in June.

SECOND QUARTER

”Revenue was SEK 1,277.7 million, a decrease of 5 percent compared to the second quarter 2018. The geographical spread, together with the product mix, explain the good revenue level despite the challenging Swedish market and the decline in the Netherlands. The Sportsbook performance developed well compared to the second quarter last year, which was positively impacted by the World Cup; the organic turnover growth was 7 percent, revenue increased by 14 percent and the Sportsbook margin was 7.8 percent. The operating profit (EBIT), which amounted to SEK 196.9 (300.7) million for the second quarter was negatively affected by increasing betting duties, increased payment costs as well as by a fine from the SGA at an amount of SEK 19 million. Despite these challenges and thanks to continued good cost control the EBIT margin was 15.4 percent, while the underlying EBIT margin, adjusted for the fine, was 16.9 percent.

CEO COMMENTS

Market challenges for the industry but long-term good opportunities for Betsson

“The gaming industry is facing changes and the second quarter posed challenges in several of Betsson’s important markets. In Sweden, the SGA revoked one license while other operators have received warnings and fines, including one of Betsson’s operational subsidiaries. Betsson has appealed the fine based on the opinion that the company was operating within the given guidelines.

As we reported for the first quarter, the operational subsidiaries have made adjustments to the Dutch customer offering to be in a position to obtain a license as soon as possible. Following a negative impact on revenues in direct connection with these adjustments, revenues have stabilised and we are convinced that Betsson is properly positioned for long-term development and growth in the Netherlands. Current information does not allow a definite and precise assessment of the timeline of the licensing process, but we welcome the KSA's clear ambition to meet a high degree of channelisation. Another market that faced challenges during the second quarter is Norway, where payment blockings make it difficult for operators to offer the customers efficient payment solutions.

At the same time other markets, locally regulated as well as non-regulated in which we operate, have developed strongly, which proves Betsson’s ability to compete successfully when market conditions stabilise. I am confident in my view of Betsson's capacity and in our strategic opportunities to pursue long-term profitable business with growth and good margins in regulated markets. We also have a geographical spread that compensates for temporary downturns in individual markets.

During 2018, we took several measures to absorb higher gaming taxes amongst other things and we could quickly show the results of these measures. We have a strong, competent and efficient organisation as well as an efficient cost structure. Our proprietary technology enables rapid market adaptations and cost-effective growth. Naturally, the results are affected when several changes in significant markets take place simultaneously, but this does not affect our belief that Betsson is strongly positioned in the industry.

We have a good financial position and we we continuously evaluate additional markets to grow in the future. Betsson’s good cost control and proprietary technology provide good opportunities to meeting market changes and offering competitive product solutions.”


INFORMATION ON PRESENTATION

Betsson invites media, analysts and investors to Betsson's office in Regeringsgatan 28, Stockholm, Sweden on Friday, 19 July, 2019 at 09:00 CET, for the presentation of the interim report with CEO Pontus Lindwall and acting CFO Kristian Saliba.

The presentation is held in English and is followed by a Q&A session. It is also available via webcast and conference call.

To participate by phone, please dial: 

UK: +44 33 33 00 08 04
SE: +46 8 56 64 26 51
US: +1 63 19 13 14 22

Please use the confirmation Code: 80494612#

To watch the webcast of the presentation, visit www.betssonab.com or  

https://edge.media-server.com/mmc/p/atn3unbm


CONTACTS:
Pontus Lindwall, President and CEO
+46 (0)8 506 403 00

Kristian Saliba, acting CFO
+46 (0)8 506 403 00
kristian.saliba@betssongroup.com

Anna Ulinder, IR Manager
+46 (0)8 506 403 00
ir@betssonab.com


This information is information that Betsson AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication through the agency of the contact persons set out above, at 07.30 CET on July 19, 2019.

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