(News Bulletin 247) – The specialist in games of chance and money saw the progression of its digital bets settle in the fourth quarter, the company evoking a “normalization”. The proposed dividend is also a little below expectations.

Sharply watched by the market, the digital shift of La Française des Jeux (FDJ) is losing momentum. The group, which had a superb IPO in 2019, delivered its annual results for the whole of 2022 on Wednesday morning, qualified as “robust” by Morgan Stanley.

Player stakes collected by the company increased by 8.7% over one year to 20.62 billion euros. Turnover, which essentially corresponds to stakes less sums returned to players and public levies, increased by 9.1% to 2.46 billion euros, exceeding the expectations of analysts, who were counting on revenues of 2.45 billion euros.

The current Ebitda margin (the current operating profit restated for depreciation, explains the company) increased by 13.1% to 590 million euros. The corresponding margin stood at 24% against 23.1% in 2021. Nevertheless, it turns out to be a little lower than the rate expected by analysts (24.2%). Net income increased by 4.7% over one year to 308 million euros.

Behaviors that normalize

Nevertheless, digital stakes are disappointing, with growth of 14% year-on-year in the fourth quarter of 2022. While the figure turns out to be significant on paper, this progression reflects a slowdown compared to the rates of the third quarter (+35%). In total, digital stakes grew by 16% for 2022, with Morgan Stanley pointing out that this progression proves to be less than the growth of more than 20% that the company was targeting for 2022.

“After two years of very strong growth, with a doubling of digital stakes between 2019 and 2021, accelerated by the changes in behavior induced by the health crisis, the progression of digital stakes is normalizing”, explained the company in the press release accompanying its annual results.

The dividend proposed by the company, of 1.37 euros per share for 2022, is also a little lower than analysts’ expectations (1.43 euros).

For the 2023 financial year, the company forecasts an increase in its turnover of between 4% and 5%, a growth in its digital stakes in France of 20%, a current EBITDA margin rate of around 24%.

On the Paris Stock Exchange, the action stumbles, falling 4.8% around 2:30 p.m., the second largest decline in the SBF 120.

A Sword of Damocles

The company’s stock remains threatened by a major sword of Damocles, namely the Brussels verdict on exclusive rights.

As part of its privatization, in 2020 FDJ paid a cash payment of 380 million euros to the French State in order to retain its exclusive rights to the physical and online lottery, as well as to sports betting at points of sale during a period of 25 years. The company previously held these rights, which represent approximately 95% of its stakes, for an unlimited period.

The European Commission opened an investigation in July 2021 to find out whether this measure did not provide an undue economic advantage to the company. Brussels then sent a letter to France in December 2021 in which it provisionally considered that the remuneration of 380 million euros “seems[ait] substantially lower than a price that could be considered a market price”. “Also, an advantage for the benefit of the FDJ seems to be present at this stage”, also noted the Commission.

FDJ risks paying an additional price. In early July, Citi mentioned a significant potential amount, around 1.5 billion euros. “In the worst-case scenario, the amount for the exclusive rights would rise to 1.5 billion euros, i.e. an additional price of 1.1 billion euros”, relativized for her part Sabrina Blanc, head of action research. for the “hotel, leisure and catering” sector at Societe Generale, with News Bulletin 247, in November.