Sazka Rebounds from Covid-19 in Q3

The Czech gaming giant Sazka Group has rebounded in its quarterly performance following several key countries easing their novel coronavirus (Covid-19) restrictions in the third quarter of 2020. The operator’s land-based operations in particular have recovered from the widespread disruption caused by the pandemic, along with similarly strong showings from its digital operations.

The world-famous Charles Bridge in the Czech Republic’s capital city of Prague.

After periods of intense lockdown and restrictions all across Europe due to the coronavirus (Covid-19) pandemic, Czech gaming giant Sazka Group has recovered impressively, displaying notable growth — especially in their igaming markets. ©FelixMittermeier/Pixabay

Sazka Group’s Strong Q3 Results Are Thanks to Easing of Restrictions

The Czech gaming giant has benefited greatly from countries easing their novel coronavirus (Covid-19) restrictions in the third quarter of 2020. In particular, the group’s land-based operations have been enjoying an especially strong recovery.

Bolstering Sazka Group’s third quarter performance were particularly strong showings from its digital operations, maintaining consistent levels even once restrictions on land-based casinos were eased.

The group’s total stakes for the three months leading up to 30 September grew by an impressive 98.1% year-on-year to a total of €2.61 billion (£2.37bn/$3.18bn). These strong results were especially aided by a full contribution from Casinos Austria, which was consolidated as a subsidiary of Sazka Group from 26th June, 2020.

Once player winnings had been counted out, Sazka Group’s gross gaming revenue (GGR) amounted to €768.9 million. This was up 66.1%, largely thanks to Casinos Austria’s generous €303.0 million contribution.

Sazka Group’s Greek operator OPAP also recovered from 2020’s second quarter, during which its operations were hit particularly hard due to coronavirus (Covid-19) restrictions. 

The operator reported a slight year-on-year decline in revenue in its third quarter, though reduced spending helped push its net profit up 6.7%. Gross gaming revenue for the three months leading up to 30th September was therefore €391.0 million (£348.8m/$465.9m), down 0.7% from €393.6 million in Q3 of last year.

Sazka’s Greek subsidiary excelled particularly in sports betting, with revenue from this vertical jumping up 13.9%, up to €104.6 million, following the resumption of many major sports events in Q3. Along with simultaneous growth from their video lottery terminals, sports betting and land-based operations offset the Greek operator’s declines in draw-based and instant lotteries.

Gaming Taxes Doubled, While Profit Shares from Equity Investments Fell

The easing of restrictions related to the coronavirus (Covid-19) pandemic across Europe were not the only factor that spurred Czech giant Sazka Group’s noteworthy growth in Q3. 

Gaming taxes more than doubled in the same time period, up to €313.1 million, again largely thanks to Casinos Austria’s consolidation, leaving behind a net gaming revenue of €455.9 million, which was up 43.8%. 

A further €50.4 million in other revenue was accounted for by the business, stemming largely from the sale of non-gaming products in its retail outlets. €11.4 million in other operating income was also noted, arriving from sources such as deferred taxes.

However, Sazka Group’s share of profit from its equity investments, such as for example its Italian lottery industry, fell by 30.1% down to €23.5m. Operator costs also rose within this vertical, with the largest increase being found in personnel expenses. These increased a considerable amount, from €25.6 million up to €82.9 million.

The group’s operating profit was down 15.0% at €96.0 million. This was due to the previously observed rise in revenue, meaning that its earnings before interest, tax, depreciation and amortization (EBITDA) were up 37.5% from Q3 2019’s total, reaching €196.6 million. And when accounting for €46.7 million in depreciation and amortization charges, plus €53.9 million in restructuring costs as a result of the ongoing restructuring of Casinos Austria, then the figures arrived at for the group’s operating profit begin to make more sense.

Sazka Group’s operating profit in fact fell even further, by €31.0 million in net finance costs, leaving the group a pre-tax profit of €65.1 million, which is down 31.9% when compared to the same period last year. And after €16.6 million was paid out in income taxes, net profit in Q3 was 32.6% below prior years, levelling out at €48.5 million.

When taking the overall amounts wagered in the nine months leading up to 30th September, these were up 14.0% at €4.46 billion, with gross gaming revenue resting at €1.42 billion. However after considering gaming taxes, the group’s net gaming revenue was in fact down 6.1%, arriving at €884.6 million.

Despite Renewed Growth, Future Once Again Looks Uncertain for Sazka

In spite of what has clearly been an exceptional period of growth for Czech gaming giant Sazka Group, especially in the face of navigating the challenges of 2020 and its accompanying coronavirus (Covid-19)-related restrictions, the future once again looks to be uncertain for the Czech supplier.

As it currently stands, the group’s fourth quarter performance is likely to again be impacted by coronavirus (Covid-19) restrictions. This can already be seen through Sazka’s land-based operations in Greece, Austria and Italy all becoming restricted once again due to severe spikes in coronavirus cases in each respective country. However, in each of these cases their online offerings have, thankfully for the group, not been severely affected thus far.

Interestingly enough, renewed government restrictions relating to the coronavirus (Covid-19) pandemic in the group’s native country of the Czech Republic have had little effect on its product sales. 

According to chief executive Robert Chvatal, Sazka Group’s broad geographic coverage, game portfolios and sales channels, mixed with a strong and growing online market, are key elements in their ability to navigate the business through what are sure to become uncertain waters.

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