Allwyn International Reports Strong First-Quarter Earnings Despite Economic Challenges

Allwyn International, the Austrian lottery behemoth, witnessed rapid expansion in the initial three months of 2022, with Chief Executive Officer Robert Chvátal stating that the firm effectively overcame the hurdles of subdued consumer demand.

Allwyn’s income increased despite muted consumer demand in the first quarter.
Chvátal mentioned that the macroeconomic climate presented difficulties in the quarter, but they did not significantly impact earnings.

He remarked: “We have observed a decrease in overall consumer demand in recent months due to persistent inflationary pressures. However, our business has thus far been only minimally affected due to the low price point and low average expenditure of our offerings, as well as our substantial base of regular patrons.”

The company’s total gaming income in the quarter was €869.3 million, a 65% surge from the initial three months of 2021, with revenue growth across all of Allwyn’s markets.

Just over half of this income originated from Greece and Cyprus, where Allwyn holds a 48.1% interest in lottery operator OPAP.

Revenue in this region increased by 162.0% to €457.2 million, partially due to Allwyn expanding its stake in OPAP during the quarter.

Austria, where OPAP has interests in Casinos Austria and Austrian Lotteries, generated €309.3 million in revenue, a 52% rise.

Allwyn’s domestic market of the Czech Republic saw revenue increase by 7% to €102.8 million.

In a similar vein, earnings across all sectors experienced an upward trend.

Digital lottery continued to be Allwyn’s primary source of income, reaching €364.3 million, representing a 32% year-over-year rise. Instant lottery earnings grew by 30% to €64.2 million. Sports wagering earnings climbed by 76% to €162.3 million, while online betting earnings expanded by 6% to €112.2 million.

Meanwhile, video lottery terminals and gambling establishments observed an increase in their earnings from €1.4 million to €166.3 million.

After accounting for the slower growth in lottery tax, net gaming earnings surged by 89% to €534.4 million.

“I am pleased that the initial three months of 2022 were largely unaffected by the COVID-19 pandemic, with only limited coronavirus-related restrictions in Austria, Greece and Cyprus, as well as some operations in Italy, most of which were lifted in the second quarter,” stated Chvatal. “The fully reopened physical retail channels in these markets performed well, while online sales continued to be robust across the regions, with online channels contributing a record 43% of GGR in the Czech Republic.”

Operational expenses also saw an increase, but at a slower pace. The company attributed this partly to a successful restructuring program implemented in June 2020, which enabled the company to scale its operations at a lower cost following the COVID-19 pandemic.

Consequently, first-quarter 2022 EBITDA was more than double that of the first quarter of 2021, reaching €267.4 million.

Allwyns operating earnings, after subtracting depreciation and amortization, reached €206 million, marking a 180% rise compared to the initial quarter of 2021.

The business also paid €44.5 million in financing charges and €32.6 million in taxes, leading to a net profit of €128.9 million, nearly four times the profit recorded in the same period the previous year.

The quarter also witnessed three significant milestones for Allwyn. In January, the company revealed plans to combine with a special purpose acquisition company (SPAC) known as Cohn Robbins Holdings Corp, which would enable it to be listed on the New York Stock Exchange.

In March, the UK Gambling Commission declared that Allwyn would be the next operator of the UK National Lottery, making it the first operator other than Camelot in lottery history.

“I am pleased that in March 2022, we were chosen as the preferred candidate for the fourth UK National Lottery license by the Gambling Commission,” stated Chvatal.

However, the finalization of the agreement has been postponed due to legal challenges initiated by Camelot. The Technology and Construction Court heard the complaints on May 11 and 12, but a ruling has not yet been issued.

Finally, at the end of the quarter, Allwyn finalized its rebranding from its previous name Sazka, changing the names of all its businesses to reflect its more “worldwide” strategy.

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