Intralot’s 2006 net profit grows most handsomely, but analysts are concerned about this year’s results
Intralot, the world’s second-largest lottery systems supplier, yesterday posted strong 2006 profit growth but concerns on short-term growth and a lower-than-expected dividend weighed on its shares. Intralot said net profits rose 49.6 percent last year to 104.6 million euros, broadly in line with market expectations, as the World Cup soccer tournament boosted sports betting in Greece and Turkey. Analysts said Intralot proposed a 2006 dividend that was lower than estimates, amid concerns over the firm’s 2007 profits after a lucrative contract in Greece expired earlier in the year. Intralot manages sports bets of 4.5 billion euros in Greece, Turkey, Bulgaria and Malta. In this country, it no longer operates OPAP’s profitable fixed-odds betting game Pame Stoichima, which earned it a commission of 10 percent on sales. «All in all, we expect the share to remain volatile in the short term, as we see mixed catalysts ahead that make 2007 a transitory year for Intralot,» a brokerage said in a note. It said uncertainty over Intralot’s Turkish and African business was also expected to weigh on the stock in the short term but was optimistic over the firm’s potential to win new contracts abroad. Intralot, with operations in 32 countries, has expanded aggressively in recent years to cash in on the liberalization of world gaming markets and make up for the loss of Pame Stoichima. Last year, it won licenses to run sports and horse betting outlets in Italy and has said it is looking for opportunities to further expand in the USA and Latin America and enter the gaming markets of China, South Korea and Vietnam. «Major developments are in progress in the international gaming sector, such as lottery privatization projects especially in the USA,» Intralot’s CEO Constantinos Antonopoulos said in a statement. Intralot will propose a -0.66 dividend per share for 2006, up from -0.55 it paid in 2005. Sales rose 51.3 percent to -791.4 million, with foreign operations accounting for about 75 percent. Intralot shares trade about 16 times estimated 2007 earnings, compared with a multiple of 28 for Italy’s Lottomatica and 15 for Ladbrokes, according to Reuters Estimates. The stock has underperformed the broader Greek market by 18.8 percent so far this year, after losing 13.6 percent on concerns it may lose its Turkish and South African contracts.
