Svenska Spel eyes long-term growth despite H1 revenue drop

Svenska Spel reported a 2.9% drop in net gaming revenue to SEK3.82 billion ($360.6 million) for the first half of 2024, with net profit falling 19.1% to SEK794 million ($75.3 million), as the company strengthened responsible gambling measures and closed two land-based casinos.

The Swedish gambling operator saw its operating profit decline by 18.2% to SEK950 million, and pre-tax profit drop by 17% to SEK1.03 billion. CEO Anna Johnson, who took over last month, said the measures, including income checks on high-staking players and increased welfare calls, were essential for long-term growth.

The closure of Casino Cosmopol venues in Gothenburg and Malmö in February due to limited profitability significantly impacted results. Revenue from Casino Cosmopol dropped by 59.0% in H1. The Swedish government proposed in May to discontinue the Casino Cosmopol business altogether.

The Tur lottery division performed well, generating SEK2.48 billion, up 4.6%. However, Sport & Casino revenue fell by 2.4% to SEK1.05 billion, and the Vegas gaming machine segment saw a 20.4% decline to SEK195 million. Online revenue increased by 6.7% to SEK2.19 billion, while offline revenue fell by 4.5% to SEK1.32 billion. Revenue from restaurants and bingo halls dropped 20.4% to SEK195 million.

A recent review of operations and costs, along with a new organizational structure from April 1, resulted in lower costs, improved results, and a strengthened operating margin. The company incurred SEK375 million in non-recurring costs related to casino closures, restructuring, and a SEK100 million sanction fee imposed by Swedish regulator Spelinspektionen.

In the second quarter, total revenue decreased by 4.8% to SEK1.87 billion, with operating profit up 16.4% to SEK640 million. Pre-tax profit rose by 9.7% to SEK655 million, and net profit increased by 5.9% to SEK499 million. Tur lottery revenue grew by 2.8% to SEK1.24 billion, while Sport & Casino revenue fell by 2% to SEK504 million. Casino Cosmopol's revenue plunged 72% to SEK35 million, and Vegas revenue dropped 23.6% to SEK94 million. Internet-based gambling revenue rose 7.5% to SEK1.10 billion.

Looking ahead, Johnson said the recent review of operations and costs and the closure of the two Cosmopol properties position the company for long-term growth. “The effect of the changeover is now visible for Svenska Spel in the form of lower costs, improved results and a strengthened operating margin,” Johnson said. “It frees up space going forward for important investments in transformation and growth.

“This has led to lower costs, an improved result, and strengthened operating margin during the second quarter. It gives us an opportunity to invest in transformation, strengthened gambling responsibility work and investments that create growth.”