(Updates with further details on Q1, outlook)
MILAN (Thomson Financial) - Lottomatica SpA said first-quarter EBITDA fell
to 205 million euros from 212 million a year earlier as currency effects offset
a strong rise in Italy sales, coming in below expectations.
Net profit was 43 million euros, against 35 million in the first quarter
2007, EBIT was down at 135 million from 140 million, and sales were 449 million,
against 435 million, the company said in a statement.
"The good performance of the group is attributable to the core lottery
business and the growth in new markets," said CFO Stefano Bortoli.
"In the United States, the results of (unit) GTECH have been influenced by
the euro/dollar exchange rate, though the activities continue to register a very
positive trend," he said in a statement.
"We are in line to reach the targets set in the 2008 to 2010 strategic
plan," he said.
On a constant currency basis, net profit was 42 million euros, EBIT 138
million, EBITDA 216 million and sales 472 million, the company said.
Analysts were expecting a net of 50 million to 52 million euros, EBIT of 141
million to 146 million, EBITDA of 206 million to 220 million, and sales of 460
million to 507 million.
In further details, Lottomatica said GTECH in the U.S. made an EBITDA of 70
million euros, from 90 million a year earlier, it said, noting EBITDA on
constant currencies would have been 81 million euros.
In Italy, EBITDA rose to 135 million euros, from 122 million, supported
particularly by scratch card sales and recently launched sports betting.
Sales rose 20.2 percent to 253.3 million euros, including instantaneous
lotteries such as scratch card sales of 88.0 million euros, up 15 percent.
Sports betting sales were 32.7 million euros, it said.
The traditional Lotto game generated sales for Lottomatica of 97.1 million
euros, against 104.4 million in first quarter 2007, it said.
In a conference call, GTECH CEO Jaymin Patel cited three reasons for the
unit's results to be lower than expected by 8 million or 9 million euros.
Product sales tend to be seasonal, with the first quarter the weakest, he
said, adding he sees pick up in second, third and fourth quarters.
A second reason for the weakness was "flat" U.S. same-store sales growth,
due to the lack of jackpot activity, which boosts sales, compared to the
year-earlier period, he said.
GTECH hopes this U.S. growth will get back by end of year to the 3 percent
level required to meet business plan targets, he said.
The third factor is inclusion of recently acquired Atronic product supply
unit, which makes shipments from second and third quarters, he said.
"My confidence in the second, third and fourth quarters picking up is quite
high," he said.
On sports betting, another Lottomatica official said this will be affected
by seasonal factors, though this summer the slowdown will be partially mitigated
by the European nations football tournament.
Patel also commented on the recent loss of the Pennsylvania lottery contract
because of delays in launching Lottomatica's Imagine terminal.
This terminal will be rolled out later this year, he said.
In the UK, the lottery concession has accepted to use the existing Altura
terminal rather than Imagine, he said, noting that product supplies in the UK
will made over the 10-year life of the concession.
Patel reiterated the Pennsylvania loss has no impact on earnings guidance
already made by Lottomatica.
nigel.tutt@thomsonreuters.com
nt/lam/nt/rw/nt/rw
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