La Francaise des Jeux reported a 10.8% increase in revenue year-onyear to EUR1.43bn ($1.55bn/PS1.21bn). Digital now accounts for 14.8% of group revenues.
FDJ’s total net revenue in the first half of this year was EUR1.29bn, a significant increase over the EUR1.29bn recorded last year. The Group reported growth in its online gambling, sports betting, and core lottery segments as well as payment and international services.
The gross gaming revenue for the first half of 2018 was EUR3.66bn, an increase of 11.1%. Net gaming revenues of EUR1.36bn were achieved after EUR2.30bn public levies. This represents an increase of 11.3%.
The group’s net income increased to EUR1.43bn after an additional EUR72.0m was generated by international operations and payments services.
Digital dreaming
FDJ’s digital revenue grew 39.8% in the first half of 2018. FDJ claims that its purchases of Premier Lotteries Ireland and Zeturf last year helped to achieve this. Digital revenue on a similar basis – assuming PLI/Zeturf was part of FDJ Q1 2013 – is still 25,1% higher.
FDJ credits this rise in digital revenue to the increased number of players. This means that newer players have a higher interest in FDJ’s digital offerings. Digital revenue has increased by overtaking point-of sale and is now 14.8% of the total revenue compared to 11.8% for H1 2023.
FDJ reports that point of sale revenue grew 7.5%, despite the slower growth. Only in France, the revenue from point-of sale increased by 2.6%.
Lottery is the key to FDJ’s success
FDJ’s revenue is dominated by lottery, when broken down by product. Net revenue for France-facing activities in the lottery sector reached EUR1.01bn during H1, up 5.0% compared to last year.
The EuroDreams and Euromillions games drove a 2.1% increase in revenue from drawing games. Revenue from instant games increased by 6.7%, mainly due to the launch of new games such as Ticket d’Or in January.
FDJ noted a strong digital trend in this segment as well, noting that 24.4% (or lottery revenues) come from digital. It adds that this brings the digital penetration of lottery in H1 up to 13.8% compared with 11.6% last time.
FDJ: Euro 2024 was not up to expectations
The revenue from online sports betting and poker increased by 14.5%, to EUR294m.
FDJ stated that tough comparison figures from the year before had a negative impact on the first quarter. First quarter 2023 was boosted by the World Cup football at the end 2022.
In Q2 2024 the betting revenue on Euro 2024 was below expectations, but operator-friendly tournament results helped to boost revenues.
Revenues from online gaming, which currently is only poker, increased by 28.3% compared to the same period last year. FDJ highlighted the benefits of cross-selling with ParionsSport en line, especially its poker product.
The international and payment services contribute a lot to the revenue growth, which is up by 72.9% at EUR129m. FDJ attributes the increase to the integration of PLI, which performed well in EuroDreams as well as instant games.
Earnings and net profit growth
FDJ published only limited numbers in terms of expenditure. The cost of lottery sales increased 1.8%, to EUR536m. Sports betting and online gambling sales also grew 1.5% to EUR125m. The holding company’s central costs were EUR128m.
The increase in operating profits is 19.9%. The growth in profit measures has been stronger than the revenue, as costs are relatively stable. The recurring EBITDA also shows this, with an increase of 23.5% at EUR370m and a margin 25.9%.
The other non-recurring income and expense amounted at EUR21m, up from EUR14m the previous year. The main reason for this is the acquisition costs, and revaluation Sporting Group B2B assets that are currently being sold.
The operating profit in H1 increased by 17.4% to EUR265m. FDJ reported EUR23m of net financial income due to the high interest rate environment, and EUR78m tax payments.
The result was a net profit of EUR213m (up 17.5% on the previous year).
Adjusted profit reaches EUR235m
FDJ will now publish adjusted net profits, starting in H1 of this year. The purpose is to show the actual performance of an economy and to allow it to be monitored, compared and tracked.
It eliminates some items such as depreciation or amortisation on tangible and intangible assets that are recognised when allocating purchase prices of business combination. The non-cash effect of currency hedges relating to Kindred Group acquisition, and changes in deferred taxes resulting from this item are also discounted.
After accounting for this, the adjusted net profit in H1 is EUR235m. This figure represents a 28.3% increase over last year.
Stephane Pallez, CEO of FDJ said: “The second quarterly confirmed the positive trends seen at the start of the year. Thanks to our points of sales network and a strong momentum of digital games which account for now 15% of group revenues,” FDJ CEO Stephane Pallez. This solid performance confirms the annual goals.
Kindred acquisition edging closer for FDJ
FDJ made an additional reference to the acquisition of Kindred that was announced in early H1. The transaction is worth EUR2.45bn. A few weeks following the original announcement, the tender was published.
The acceptance period started in February, and will run until 19 November. FDJ already has several approvals in place for this acquisition. The approval of the French Competition Authority, is currently the final regulatory requirement to complete this deal.
The initial settlement date has been set to 28 November.
Pallez stated that “we hope to complete the Kindred acquisition project in the very near future. This will mark a significant new step for the development of the Group, both in terms of its international expansion and our online gaming and sports betting activity to the benefit to all of our stakeholder.”
