Contraction of Italian market decimates Snai's Q1 profits
Net profit down 97% due to decline in revenues and operating income.
Italian operator Snai has blamed the contraction of the Italian sports betting and horse racing market and a higher rate of payout in sports betting for a drop in group revenues for the three months ending 31 March, leading to a huge drop in net profit.
Revenues fell 10% year-on-year, down from 157m to 141m for the period, which the company claim is a result of the continuing difficulties experienced by the Italian sports betting and horse racing sectors. In January AAMS reported a 71.7% year-on-year decline in gross gaming revenue, while horse betting GGR fell by 54.4% after the industry went on strike when funding to the sector was cut as part of the government’s austerity measures.
This in turn saw EBITDA drop 18% year-on-year from 33.2m to 27.1m, and operating income fall 37% year-on-year from 17.3m to 11m. The drop in EBITDA and income contributed to a huge drop in net profit. This fell 97% from 6.5m in 2011 to just 0.2m.
This was exacerbated by a higher payout percentage in sports betting, which rose from 77.3% in 2011 to 80.2% for the same timescale in 2012. While Snai claimed that this was partially offset by the growth of VLT operations and the legalisation of cash poker and casino games, it was unable to prevent the decline.
The fall in revenues is the latest setback to hit the operator, after it posted a slight decline in revenues in its results for the twelve months ending 31 December 2011. In February this year it was announced that Snai was one of the ten gaming Italian machine operators to be fined for a failure to comply with regulation of the country’s gaming terminals “ a dispute which saw the agreed acquisition of rival operator Cogetech cancelled.
This was followed by the news that Snai was forced to shut down the video lottery terminal network supplied by Barcrest Games in April, after unusual activity was spotted.