Austrian slot giant Novomatic has published the far-reaching effects of the coronavirus pandemic on its global operations with a 36 per cent decline in revenues across the board in the first half.
In the first half of 2020, Novomatic Group’s revenues amounted to €805.4m, compared to €1,259.4m in the same period of 2019. The decline in revenues by €454m (-36.1 per cent) was attributable to almost all markets: Italy (-€102.8m), Eastern Europe (-€71.3m), Germany (-€71.2m), Austria (-€61.3m), Other Markets (-€54.3m), United Kingdom (-€52.3m), Spain (-€48.6m) and Netherlands (-€23.6m).
Due to the far-reaching lockdown measures, which almost completely interrupted the operations of slot arcades, casinos and betting sites for about two months, the online segment was able to achieve a significant increase (up €31.4m).
Novomatic said: “The current reporting period was strongly impacted by the consequences of the COVID-19 pandemic. In the majority of the Novomatic Group’s core markets, national governments introduced measures, in particular temporary lockdowns, from March 2020 onwards to stem the spread of COVID-19. Among other things, these measures included the temporary closure of gaming facilities (casinos, slot arcades and single sites/bars) operated by the Novomatic Group. The closure also affected the group’s Gaming Technology business, resulting in lower sales of gaming machines as well as lower rental income due to the revenue sharing model applied in many markets. The total number of operated locations declined by approximately 30 against the previous year to around 1,940 sites. Due to partial closures, the number of operated gaming devices came in at approximately 41,500.”
The largest decrease in revenues in absolute figures was recorded in the area of revenues from the operation of gaming machines, which declined by €262.1m (-43.9 per cent). Germany (-€64.2m), Eastern Europe (-€52.3m) and the United Kingdom (-€43.1m) accounted for the largest share of this decline.
Novomatic said: “The focus of the Germany-based group companies in the Gaming Technology segment is in the area of gaming machine rental. In Germany, total revenues of the Gaming Technology segment decreased by €7.2m (-5.2 per cent) from €138m in the first half of 2019 to €130.8m in the first six months of 2020. The rental portfolio of gaming machines declined by around 1,900 units since the beginning of the year, resulting in a corresponding decline in rental revenues. In addition the reduced rental income resulting from a COVID-19 rent reduction model for contractual partners lead to lower rental revenues.”
“The Italian market was hit particularly hard by the COVID-19 pandemic in the first half of 2020, resulting in strict lockdown orders to curb the spread of the virus. On top of this, the stakes-based gaming tax was increased several times already in 2019, resulting in an additional reduction in revenues. Revenues of the Italian companies falling into the Gaming Technology segment amounted to €29.4m in the first half 2020 compared to € 90.2m in the previous year, corresponding to a decrease by €60.8m(-67.4 per cent). United Kingdom The British market is one of the largest gaming markets in Europe and includes approximately 185,000 gaming machines, which are mostly located in pubs, licensed betting offices (LBOs), slot arcades, casinos, and bingo centers. The COVID-19 pandemic also restricted business activity in the UK. The facilities of all gaming service providers were closed on March 23, 2020 and a successive reopening did not occur until the beginning of July 2020. These closures also resulted in lower sales in the Gaming Technology segment. Revenues during the first half of the year came in at €4m, down €9.2m (-69.9 per cent) on the comparative period’s figure of €13.2m.”
In addition to revenues from the operation of gaming machines, the income from rent and management services also decreased significantly by €79.7m (-30 per cent) to €186.1m. A large part of this is attributable to Italy which recorded a drop by €38.5m. The regions Other Markets (-€12.8m) and Eastern Europe (-€10.3m) also suffered sharp declines. Further pandemic-related year-on-year declines were recorded in the areas of betting revenues (€19.5m), other revenues (-€12.9m), catering and hospitality revenues (-€12.7m) and live gaming revenues (-€8.8m). Only eBusiness revenues benefited from the current environment, resulting in an increase by €33.3m. Sales revenues also decreased and at €94.4m came in about €103.3m (-52.3 per cent) below the previous year’s level. The regions Other Markets (€56.6m), Spain (-€17.1m) and Austria (-€12.9m) in particular recorded a significant decline in revenues in this area against the previous year.
The highest savings were achieved in the area of marketing, where expenses were reduced by €19.7m from €63.5m in the first half of 2019 to €43.8m in the first six months of 2020.
The financial result improved from -€17.5m in the previous year to -€11.3m in the first half of 2020 due to changed financing structure.