Intralot beats nine-month forecasts despite increased costs, on track for 2007 targets

Greek lottery systems supplier Intralot reported a better-than-expected nine month net profit yesterday and analysts were optimistic the firm would achieve its 2007 targets. The world’s second-largest lottery systems supplier said net profit rose 4.2 percent to -85.5 million ($126.4 million) as strong foreign operations and two big IT deals partially offset start-up costs. Net profit had been seen at -82.6 million according to a Reuters poll of seven analysts. «The company managed to increase net profits, although it had a hard comparison due to the football World Cup that took place in the second and third quarter last year and despite higher setup costs,» Intralot Chief Executive Constantinos Antonopoulos said in a statement. The firm, with operations in 40 countries, has pursued an aggressive expansion plan in recent years to cash in on the liberalization of world gaming markets. Its foreign business accounted for about 86.5 percent of total turnover compared to 73.4 percent in the same period last year. Intralot is targeting net profit of -115 million and sales of -880 million for the full year. «The results indicate that Intralot is on track to achieve its full-year targets,» Proton Bank wrote in a note to investors. Sales fall Sales fell 0.7 percent to -568.7 million, while earnings before interest, tax, depreciation and amortization (EBITDA) dropped 3 percent to 179.9 million as revenues from the soccer World Cup in 2006 were not repeated this year. The loss of the profitable risk management contract for Greek betting monopoly OPAP’s fixed-odds sports betting game, Stoichima, and high costs which Intralot booked to start operations in Italy and South Africa earlier in the year also weighed on the results. «Geographical diversification has started to pay off. It seems that Intralot has overcome the break up of OPAP’s contract and legal disputes faced in Turkey and South Africa earlier this year,» said Manousos Stathoudakis, head of research at Alpha Finance. Its shares were down 6.2 percent to -13, in midday trade, underperforming a 2.52 percent slide in the Athens bourse’s benchmark general index. Analysts blamed the drop on weak international equities sentiment. Its shares trade at about 18 times estimated 2007 earnings which compares with 22 for Italy’s Lottomatica, the world’s largest lottery operator, and 32 for Scientific Games, according to Reuters Estimates. The stock has risen 6.4 percent since the start of the year, underperforming a 14 percent gain of the broader Greek market, on concerns over when new contracts will turn profitable.