High Distribution Costs Impact OPAP Q3 Profit

With increased investments in sponsorship and advertising leading to a doubling of distribution costs in the third quarter of 2009, Greek gaming monopoly operator OPAP S.A has reported a 20% fall in net profit to €130.5 million for the period, despite total revenues remaining flat versus the same period last year.

Total revenues amounted to €1.21 billion for the quarter with sports betting revenues up 7% to €470.0 million, following strong growth from Stihima which helped offset a 5% faill in revenues from numerical games to €740.0 million.

With the impact from the strike by the company's sales agents in July, OPAP's flagship Kino product saw revenues fall 9% to €688.1 million, while there were also further revenue declines in Super 3, Proto and Extra 5, down a combined 14% to €28.9 million. The remaining numerical games, Joker and Lotto, saw revenues increase by 42% and 33% to €68.6 million and €17.1 million respectively.

OPAP's payout to lottery and betting winners increased 2% to €830.3 million during the quarter, contributing to a total cost of sales of €978.2 million, up 1% on the corresponding period last year.

Distribution costs including sponsorships, grants and advertising expenses increased by 108% to €40.0 million while administrative expenses rose 20% to €12.2 million, leading the company to record a 20% fall in net profit to €130.5 million for the quarter.

For the nine month period, total revenues remained flat at €3.97 billion with a net profit of €501.7 million, down 9% year-on-year.

As a result, OPAP's board of directors have proposed an interim dividend of €0.65 per share pre-tax compared to €0.80 last year, equivalent to a total of €207.4 million.

As at September 30th the company held cash and cash equivalents of €676.1 million compared to €736.7 a year ago.

Shares in OPAP S.A (Co. Profile) (ASE:OPAP) gained 3.4% yesterday following publication of the results and are currently trading at €16.75 per share in Athens this morning.