Strong second half helps FDJ limit 2020 turnover and revenue declines

After the business reported an 18.4% year-on-year decline in turnover for the first half of the year, lottery sales and sportsbook stakes rose 2.8% over the six months to 31 December, 2020. 

This helped FDJ generate turnover of €15.96bn (£14.02bn/$19.31bn) for the year, though this was down 6.8% compared to 2019’s adjusted €17.13bn total. The 2019 figures were adjusted to reflect France’s new fiscal and regulatory framework, Sporting Group’s full results, and expenses related to FDJ’s initial public offering. 

This broke down to €12.73bn in lottery sales, down 6.0%, of which €7.72bn was generated from instant win games (down 5.9%) and €5.01bn (down 6.2%) from draw-based games. 

FDJ said growth in online lottery sales only partially offset a decline in point-of-sale activity, that was particularly significant in a first half which saw France go into lockdown from 12 March. After lockdown was eased from June onwards, activity improved though a second lockdown followed from 30 October. 

Over the year online lottery turnover exceeded €1.10bn, or almost 9% of all stakes for the vertical. 

Sports betting, meanwhile, saw amounts wagered fall 10.0% to €3.19bn. A second half of double-digit growth mitigated the 38.8% first half decline, exacerbated by a suspension of almost all sporting activity between mid-March and mid-May. 

Again, this accelerated customers’ migration online, aided by the rollout of FDJ’s new Parions Sport En Ligne site, and the launch of the Loto Foot 8 and 12 games. In total FDJ’s online sportsbook accounted for more than 80% of stakes, compared to 70% in 2019. 

“2020 was an unprecedented and contrasted year during which FDJ demonstrated resilience and solidarity,” the operator’s chief executive Stéphane Pallez said. “The health crisis had a particularly strong impact on our business in the first half. 

“But the recovery in the second half, combined with the group’s responsiveness and relevant digital strategy, enabled us to preserve our performance and annual results,” she said. “I would like to thank our employees for their commitment, and to renew our support for our network of retailers, some of which have been severely impacted.”

Over the year FDJ’s customers won €10.85bn, leaving gross revenue of €5.11bn, down 6.4%. Once the operator’s €3.24bn in public levies, including lottery and sports betting rights payments, plus a further €13.9m in sports betting revenue were factored in, its net revenue for the year came to €1.88bn, down 6.5%. 

It then generated an additional €40.9m in revenue from its FDJ International B2B arm, payment services and entertainment, for total revenue of €1.92bn. This represented a 6.3% year-on-year decline. 

However, the early- and late-2020 lockdowns did reduce costs, aided by efforts to reduce outgoings as the business looked to mitigate the impact of Covid-19. This resulted in non-recurring operating profit rising 28.8% to €324.7m. 

Once depreciation and amortisation charges of €102.0m were factored back into that total, FDJ’s earnings before interest, tax, depreciation and amortisation was up marginally at €427.0m. 

Non-recurring items, relating to internal restructuring expenses, rescued operating profit for the year to €292.7m, down slightly from the prior year. This increased to a pre-tax profit of €298.7m after FDJ’s share of joint venture profits and financial income was factored in. 

Income taxes for the year were reduced to €85.0m, thanks to a tax saving that arose from the capital loss on equity investments resulting from its restructuring of Sporting Group, which was acquired in June 2019.

This left a net profit for the year of €213.7m, up 5.9% year-on-year. 

Looking ahead, FDJ said it is focused on offering an increasingly global gaming experience and strengthening its leading position in the French market. 

“Uncertainties persist for 2021,” it added, however. “Nevertheless, for lottery, launches and relaunches are planned for numerous instant games, while more than ten events promoting special enhanced Loto and Euromillions jackpots will pepper the year for draw games. 

“The expansion of the online lottery gaming offer will continue, with innovative and richer gaming experiences,” FDJ continued. “In addition to its intrinsic momentum, sports betting will also benefit from the UEFA Euro and the Tokyo Olympic and Paralympic Games, which will enliven the events calendar.”