French Lottery Operator FDJ Warns of Financial Hit from Coronavirus
COVID-19: UPDATE ON THE FDJ GROUP
- Business continuity ensured thanks to the mobilization of the Group. Nearly 80% of FDJ outlets authorized to remain open at this stage, within the framework of the authorizations given to tobacconists and press merchants. The Group works alongside its retailers to help them enforce health precautions.
- Financial strength of the FDJ group with significant short-term cash available.
- Fiscal year 2020 significantly affected on sports betting by the cancellation of competitions; lottery activity slows down due to government regulations and the company’s decision to suspend the “Amigo” game.
- Global and significant action plan already underway to limit the impact of the drop in activity on the Group’s profitability.
- In order to encourage significant participation by its new shareholders, the FDJ group postpones its General Meeting from April 22 to June 18, 2020 and the payment of the dividend of 122 million euros to June 30.
Boulogne, March 20, 2020 – 7:00 a.m .: La Française des Jeux (FDJ), the leading gambling operator in France, has provided an initial estimate of the effects of the Covid-19 epidemic on its business.
Estimated impact of the Covid-19 epidemic on FDJ activity
In mid-March, the level of bets recorded by FDJ was in line with the Group’s annual objectives.
As part of the health crisis linked to the Covid-19 epidemic, FDJ launched its business continuity plan in mid-February. The objective is to guarantee the best safety and working conditions for its employees, the vast majority of whom are now teleworking, and to maintain the continuity of its operations, particularly in terms of its information systems and its chain logistics.
This plan has been reinforced to deal with the exceptional measures taken by national and international authorities to stem the Covid-19 epidemic, such as the closure of most businesses and the limitation of individual travel in France, the postponement, even cancellation, many national and international sporting events. If nearly 80% of FDJ’s points of sale (mainly press distribution and tobacco shops) are authorized to receive from the public, these provisions will have consequences for the Group’s activity that, to date, difficult to assess precisely.
- For the lottery (around 80% of the company’s activity in 2019):
— The “Amigo” game was suspended, as a precaution, to avoid parking in front of the screens at the point of sale. The one-month impact of this decision can be estimated at around 17 million euros on turnover and around 10 million euros on EBITDA;
— Attendance at open outlets should decrease given the containment measures taken by the government. In this context, and by way of illustration, FDJ estimates that a drop in bets (excluding “Amigo”) of around 50% would result in a monthly impact on turnover close to 55 million euros, and on EBITDA of around 17 million euros, before further savings measures;
— FDJ continues to perform well on its online lottery games.
- For sports betting (around 20% of the company’s activity in 2019):
— The cancellation of many sporting events, including UEFA Euro 2020, most of the championship matches, notably football and basketball, and all of the upcoming tennis tournaments, including Roland Garros, should lead to a very significant decline stakes on the 1 st semester. However, the postponement of certain competitions remains possible in the second half of 2020 as for the football championships and Roland Garros, or even in 2021 as for the UEFA Euro 2020;
— On these bases, for sports betting, FDJ anticipates a loss of turnover of around 120 million euros in 2020, and of EBITDA of around 50 million euros, this excluding any postponement of canceled competitions and excluding new savings.
Measures to limit the impact on profitability already underway and a solid financial situation
FDJ has also already taken a number of measures to limit the effects of the crisis on its profitability. In addition, the Group is working on further reductions in its cost base, and to allow business to resume in the best conditions as soon as circumstances allow.
For Stéphane Pallez , President and CEO of the FDJ group: “ Today we are facing an unprecedented and exceptional situation which requires everyone’s mobilization and will weigh on our activity for an indefinite period. In this context, the FDJ group organized itself very quickly to respond responsibly to this unprecedented health crisis and limit the consequences on its employees, customers, retailers and shareholders, thanks to its solidity, its reactivity and the commitment of all.”
Our priority is to remind our employees, our customers and our retailers that all health regulations must be scrupulously observed. We also intend to support our retailers and help them apply barrier gestures on a daily basis, to ensure their safety and that of their customers.
The Group will use all of its information media (cash registers, television draws, websites and applications, social networks) to help inform everyone during this unprecedented health crisis.
For its part, the FDJ Corporate Foundation has decided to answer the call of the Secours populaire français with a donation of 200,000 euros. The latter has an urgent need to maintain its aid to the most vulnerable, in particular to provide the homes of the elderly with products essential to daily life.
The Group’s next financial communication
Given the changing nature of the situation, the estimates and forecasts presented by FDJ cannot constitute either a forecast or a target. The Group will make a new update at the latest when its stakes and its 1st quarter turnover are published on April 21, after the close of trading, and will communicate its new 2020 outlook as soon as possible.
General meeting on June 18, 2020 and payment of the dividend on June 30
The FDJ group wishes to allow its new shareholders to physically participate in its first General Assembly post IPO. This is why, drawing on the consequences of current health constraints, the Group has decided to postpone its GA from April 22 to June 18, 2020 and, as a result, the scheduled dividend payment date of 0.64 euros per share, scheduled originally May 6, is shifted to June 30.
SOURCE: FDJTags: FDJ, French Lottery