Intralot’s growing fortunes

Greek gaming systems operator Intralot said it saw further growth prospects abroad, after its booming foreign business more than offset slower domestic revenues and drove up its 2005 net profit. The world’s third-largest lottery company by revenues posted a 28.6 percent rise in 2005 net profit yesterday to 69.9 million euros ($84.40 million). «In 2005, the company continues its global expansion through organic growth of existing contracts, new contracts, the acquisition of a betting company in Poland and the increase of the stake in our Turkish subsidiary,» Intralot Chief Executive Constantinos Antonopoulos said in a statement. The figures lagged market expectations but Intralot said provisions it took for possible excess payout to winners in sports betting had weighed on the results. Its shares rose 2.02 percent to a new year-high of 21.22 euros as investors looked at the company’s positive outlook. The stock has gained 40.5 percent year-to-date, outperforming the broader Greek market by 24.3 percent. «The market is more focused on potential new projects the company might take over in Turkey, Russia, US and South Africa than on the figures,» said an analyst who declined to be named. In Greece, the operator’s revenues, which mainly come from gaming monopoly OPAP’s flagship sports bet Stoichima slowed last year, as the game posted a 10.8 percent drop in sales, hurt by online competition. But Intralot’s global expansion strategy more than offset that. Last year, it clinched a series of deals in Europe, Africa, Middle East, Oceania and the Americas. Group sales grew 66.4 percent to 523 million euros, above its guidance for 500 million euros, with foreign operations contributing 74.7 percent, up from 62.7 percent in 2004. Challenging future Intralot has operations in 32 countries in all five continents, and said it would benefit from forthcoming liberalization of the world gaming market and from the soccer World Cup in Germany this summer. «Looking forward, 2006 and 2007 will be challenging years since important tenders for lottery privatization projects and other major contracts will take place,» Antonopoulos said. Pretax profit rose 51.7 percent to 150.5 million euros, in line with the company’s guidance, with earnings before interest, tax, depreciation and amortization (EBITDA) rising 52.2 percent to 160 million euros. Intralot said it would propose a dividend of 0.55 euros, up from 0.48 euros last year. The dividend translates to a yield of 2.6 percent based on the closing share price of 20.8 euros on Wednesday. Intralot shares trade at 22.13 times 2005 earnings, a discount to the multiple of 28.79 for the European travel and leisure sector, according to Reuters estimates. Figures are not directly comparable to 2004 as they included for the first time full-year results of subsidiaries in Turkey and Poland.