Intralot hopeful of Q4 recovery after third quarter loss widens

| By Robin Harrison
Lotteries and gaming giant Intralot says the reopening of Australian gambling venues and “smoother” sports betting operations leave it hopeful of a recovery in the fourth quarter of 2020, after Q3 was once again disrupted by the novel coronavirus (Covid-19) pandemic.

The company’s chairman and chief executive Sokratis Kokkalis, who returned to the position last month, said the business worked to mitigate the impact of Covid-19 and adverse developments in certain jurisdictions during the period.

However Q3 saw the business continue to struggle from the loss of the Inteltek sports betting contract in Turkey and the loss of its Bulgarian licence, two factors that have slowed growth throughout the year. 

While this was partially offset by a one-off equipment and services sale in the Netherlands, and an improved US performance, revenue for the three months to 30 September was down 44.9% year-on-year at €97.8m (£88.9m/$118.6m).

The biggest decline was reported for licensed (B2C) activities, for which revenue dropped 69.2% to €33.9m. Technology sales made up the majority, at €55.2m, and grew marginally year-on-year. 

A further €8.7m came from game management operations, down 38.7% from the prior year.

These declines did see cost of sales fall sharply, to €76.9m, this left a gross profit of €20.9m, down 28.7%. 

After operating costs, including other income of €3.9m and €16.8m in administrative expenses, Intralot’s earnings before interest and tax came to €1.2m for the quarter, an improvement on the €1.1m loss posted in Q3 2019. 

Earnings before interest, tax, depreciation and amortisation (EBITDA), meanwhile, was down only marginally, to €18.5m. Once financial items were factored in, the business’ operating loss widened from €5.4m in the prior year, to €14.0m. 

When €5.4m of income tax was paid, Intralot posted a net loss of €19.4m for the quarter. This widened by €1.2m once its non-controlling interests in other businesses was included, for a loss of €20.5m, up 108.1% year-on-year.

For the nine months to 30 September, revenue was down 52.1% at €266.1m. This broke down to €153.9m from technology sales, down 2.5%, with B2C revenue plummeting 73.0%. Game management revenue, meanwhile, was down 64.6% at €20.6m. 

EBITDA for the year to date came to €45.2m, a 42.6% drop, with operating loss jumping to €56.8m. This increased to €62.0m after income tax, and then €63.5m after its loss from non-controlling interests was factored in.