OPAP Q2 net down 30.4% in Greece and Cyprus, misses forecast

Europe's biggest betting firm OPAP announced on Thursday an annual 30.4% drop in second-quarter net profit, hit by a deep recession in its debt-choked Greek home market.
OPAP, 34% owned by the Greek state, is key to the government's plans to raise 5 billion euros from privatisations this year under an EU/IMF bailout plan.
Net profit was 106.9 mln euros ($150.6 mln), below the average forecast from analysts' for 121.8 mln euros. Results were hit by a deferred tax charge and by the absence of major sporting events such as the World Cup soccer tournament, which had boosted last year's revenues.
Earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 28% to 154 mln euros, with the EBITDA margin falling to 14.4% from 15.6 in the second quarter last year.
In a move to boost its value, OPAP has been adding new games and overhauling its outlets. A new Greek gaming law grants the firm an exclusive licence to operate 35,000 videolotto machines (VLTs) that will be launched in the country.
Chief Executive Officer Yannis Spanoudakis said OPAP's network of 5,500 outlets in Greece and Cyprus and its robust balance sheet enabled the firm to tap this new opportunity.
"The recent endorsement of the new Greek gaming law … provides us with a much-needed visibility for the gaming business environment over the coming years," Spanoudakis said.
Analysts expect the new VLT business to be a growth catalyst for the firm. But they also warn that it might hurt profit in the long run, because VLTs yield lower profit margins than OPAP's current operations.
Second-quarter sales fell 22% to 1.069 bln euros as austerity measures curtailed Greeks' appetite for betting.
Turnover from the two flagship games Kino and Stihima declined 16.3% and 35.8%.
OPAP has shed 35% of its market value so far this year amid plunging stock markets due to the euro zone debt crisis.