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Solid year for Betsson as casino growth offsets sportsbook decline

7th February 2014 9:01 am GMT

Swedish gaming operator Betsson has reported a 12 per cent increase in total revenue to SEK2,476.7m for the full 2013 year, despite posting only marginal growth in the final quarter of the year as results were negatively impacted by a record low sportsbook margin and unfavourable exchange rates.

Fourth quarter revenue rose 0.6 per cent to SEK655.5m, which included a negative impact of SEK26.3m relating to unfavourable exchange rate fluctuations.

Gross turnover from sportsbook increased by 8 per cent to SEK4,094.6m during the quarter, with live betting accounting for more than half the total with SEK2,770.8m, 12 per cent year-on-year.

Gross Profit Q4 and Full Year 2013

Swedish Krona (SEK) Q4 2012Q4 2013 FY 2012FY 2013
       
Casino 335.8m364.1m 1,248.9m1,335.4m
Sports Betting 165.5m146.3m 432.0m577.6m
Poker 31.6m25.4m 116.7m99.2m
Other 15.9m12.8m 56.1m61.7m
TOTAL 651.9m655.5m 1,853.7m2,073.9m

Gross profit from the product fell by 12 per cent however to SEK146.3m, following a record low sportsbook margin of 6.2 per cent compared to 7.4 per cent a year ago. Sportsbook now accounts for 27 per cent of total gross profit and includes SEK67.2m in licensing revenue, as well as gaming contributions from B2B.

Casino continues to be Betsson’s strongest product, generating two-thirds of total gross profit with SEK364.1m, an increase of 8 per cent compared to the same period last year which benefited from a large jackpot.

Gross profit in poker fell 20 per cent to SEK25.4m which the company attributed to continued decreased activity in poker networks and to Betsson terminating its cooperation with unprofitable poker customers. Other products generated gross profit of SEK12.8m, down 19 per cent versus a year ago.

Betsson saw its mobile channel contribute revenue of SEK80.9m for the quarter, an increase of 16 per cent versus the previous quarter following the re-launch of a mobile solution for Betsson.com in Q2.

At the end of the quarter, active customers fell by 5 per cent quarter-on-quarter to 401,400, from a total registered customer base of 6,732,700.

Marketing expenses climbed 3 per cent to SEK195.2m, while personnel costs rose 19 per cent to SEK101.8m. Other external expenses were up 8 per cent to SEK96.9m.

As a result, operating profit fell 13 per cent to SEK150.0m, with net profit amounting to SEK140.9m, down 16 per cent to SEK140.9m.

The company’s board of directors has proposed a dividend of SEK9.71 per share, equivalent to SEK421.5m in total.

Betsson said that it expects its main markets to grow by a total of 7 to 8 per cent in 2014, with the company expected to continue to grow at a faster rate than the markets. Management is also of the opinion that revenue from mobile devices will increase significantly during the next twelve months.

For the full year, total revenue rose 12 per cent to SEK2,476.7m, with net profit for the year rising 3 per cent to SEK562.0m.

Betsson president and CEO Magnus Silfverberg said that the company’s acquisition of Oranje and Kroon Casino, also announced this morning, will allow the company to gain a strategic position in the Netherlands as one of the leading operators in the country.

“This market is expected to be re-regulated in 2015 and, when this takes place, Betsson’s total profits from locally-regulated markets is expected to comprise over 25 percent of the group’s overall profit,” said Silfverberg. “At the same time, the optimization of the operating entities continue through individual real-time customer communication, digital marketing and mobile offers.

“These initiatives have already had a positive impact and contributed to the strong underlying activity and growth in the key product segment casino which despite unfavorable exchange fluctuations and strong comparable figures grew by 8 per cent.”

As at December 31st the company held liquid funds of SEK562.5m compared to SEK467.2m a year ago.

Shares in Betsson AB (Co. Data) (OMX:BETS-B) have gained 6.42 per cent to SEK190.50 per share in Stockholm this morning following the company’s joint announcements.

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