Svenska Spel operating profit decreases 49% in Q1

Finance News

The first quarter of the year is marked by a time of adjustment for Svenska Spel in order to lay the foundations for continued successful operations.

Partly the work to future-proof the group to create room for growth. Partly the winding down of Casino Cosmopol in Malmö and Gothenburg to reduce losses within the business area. It has a major impact on the group’s results during the quarter, while the underlying business remains stable with strong results from the Tur business area. This is evident from Svenska Spel’s interim report for the first quarter of 2024, which is presented today.

Svenska Spel has a stable business with strong brands, the highest image in the gaming industry and high commitment among employees. But also challenges in the outside world such as slowing growth in the gambling market and recession in the Swedish economy. To meet this, the group has been carrying out work since the autumn to future-proof Svenska Spel by reviewing the group’s organization, working methods and costs.

We have reorganized, reduced the workforce, and from April 1 have a new organization in place. In this way, we have freed up resources that we can invest in transformation, a strengthened gambling responsibility work and growth. These are important investments for long-term sustainable value creation, says Erik Strand, president and CEO of Svenska Spel.

During the quarter, a decision was also made to wind down Casino Cosmopol in Malmö and Gothenburg in order to reduce losses within the business area.

The group’s net gaming revenue for the quarter is SEK 1,956 million (1,976). This is a decrease of 1 percent, which is primarily due to the restructuring within the Casino Cosmopol & Vegas business area. The operating profit of SEK 310 million (612) is a decrease of 49 percent and the operating margin amounts to 16 percent (31).

Operating profit and operating margin are negatively affected by non-recurring costs of SEK 375 million during the quarter. These include liquidation of the casinos in Malmö and Gothenburg, restructuring costs linked to the review of the group, as well as a provision for the penalty fee that the Gambling Inspectorate announced to Svenska Spel Sport & Casino.

Excluding non-recurring costs, the operating profit is SEK 683 million (612) and the operating margin 35 percent (31).

For the group as a whole, online business increases by 6 percent compared to the same quarter last year, and accounts for 56 percent (52) of the group’s revenue during the quarter.

Net gaming revenue for business area Sport & Casino decreases during the quarter by 3 percent compared to the same quarter last year. This is mainly due to a worse outcome for the pool games.

Business area Tur increases net gaming revenue by 6 percent compared to the corresponding quarter last year. This is the highest quarterly growth for the business area ever. The increase is driven by Eurojackpot and continued growth for Triss. This is due both to efforts to increase sales of Triss, and the effect that Triss is popular as a gift on Valentine’s Day and Easter, for example.

Revenues and results for the Casino Cosmopol & Vegas business area continue to be negatively affected by the major reorganization of Casino Cosmopol. Net gaming revenue is down by 32 percent compared to the same quarter last year. This is mainly due to the closure of the casinos in Malmö and Gothenburg, but also reduced opening hours at the remaining casino in Stockholm. The group’s operating profit is affected by -238 MSEK from the Casino Cosmopol & Vegas business area, which is a deterioration of the operating profit by 183 MSEK compared to the same quarter last year.

During the quarter, Svenska Spel distributed 71 million winnings in number games and lotteries with a total value of SEK 395 million.

The quarter’s highest win was more than SEK 173 million on Eurojackpot, the eighth highest win ever at Svenska Spel and the highest Swedish game win on Eurojackpot since 2019. Sportspelen has delivered 18 million wins during the quarter, of which 15 on Stryktipset.

Stryktipset has completed the 27th edition of the Tips-SM championship with approximately 53,000 people and 3,500 teams registered. The three best punters individually and as a team were given the prize money of a total of half a million kroner to sports associations through the sponsorship initiative Gräsroten.

Svenska Spel has approximately 5,100 agents across the country and continuously invests in increasing the customer experience in the stores and making it easier for the agents. During the quarter, the agents were celebrated at a Winner’s Gala when the year’s best agents in nine categories were named.

In sports sponsorship, Svenska Spel began the year as the main sponsor of the Sports Gala and has subsequently carried out a large number of activations around the Swedish Skiing Association and its eleven sports, the SM week in Luleå and Boden, and ice hockey’s highest leagues SDHL, SHL and Hockeyallsvenskan.