Day At The Track

PMU reports revenue decline, profit up 1st quarter

08:56 AM 13 Apr 2014 NZST
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First quarter 2014 revenues at PMU (Pari-Mutuel Urbain) in France declined 3.4% from last year, driven by a 4.5% decline in the horse wagering segment (France declined 7.4% and international increased 45.6%), despite an increase in supply including international. Gains in sports wagering (up 17%) and online poker (up 9.2%) helped partly offset the horse sector decline.

2013 full year net profit increased to £854 million from prior year's £852 million due to reported aggressive marketing that helped make sports wagering and poker profitable. Growth in international horse racing helped erase declines in French racing profits along with implementation of rigorous expense management under a plan to save £15 million according to published reports. PMU reported that despite the soft revenues, it met commitments to funding and support of horseracing.

It was also reported that the results were not a surprise and expectations over the next several years will be reserved. After 15 years of growth on horserace betting, revenues dropped 1.8% versus a gain of 0.5% in 2012. Total revenues declined 0.9% from prior year.

At a Monday press conference, PMU's CEO Philppe Germond stated that PMU had resisted horseracing weakness due to its "multidisciplinary" operations as sports wagering grew 22% to £199 million and poker increased 10% to £569.9 million. He further commented that PMU is now firmly established in these sectors following the 2010 opening of Paris-Online to diversify its business and that horse-wagering reflects weakness in "mature recreation" such as casino games (down 4.5%) and lotteries (down 8.3%).

He attributed part of the horse-wagering weakness to reduction in the number of runners. International activity grew 93.6% to £638.3 million. Germond remarked that the strategy of exporting races and the PMU image is winning. In addition, he pointed to the positives of the acquisition of Eurotierce in Belgium in 2013 which quadrupled its activity in just a year. Regarding 2014 he expects further decline in the horse-betting segment in 2014 but at a slowing rate.

The PMU press release (translated) is shown below.

PMU reported 2013 net profit of 854 million euros

The activity of the first quarter of 2014 was in line with forecasts. The PMU 2020 strategic plan is in active development phase. Despite the continuing difficult economic environment in France , the PMU has succeeded to stay the course of growth with an increase of the gross proceeds of games of 0.6 % in 2013. Strategic plan to 2020 has entered its implementation phase and reinforces fundamental business model changes.

2013 net income for the PMU , donated in full to the French horseracing , amounted to £854 million for the year 2013 and is in line with the objectives announced at the beginning of year 2013. PMU recorded year-on -year growth in gross gaming revenue of 0.6% to 2.542 billion euros, despite a slight decline of 0.9% total revenues to £10.405 billion. This performance was made possible thanks to an aggressive marketing strategy in France and abroad and strict management of the company. Diversified activities (i.e., Paris sports and poker) are now profitable and benefit directly to horseracing. The strong development of international (up 94 %) contributed also to the overall performance of the business in 2013.

Strategic Plan PMU 2020:

For five years, the PMU has largely turned to face many challenges, such as market opening of online games and horse betting globalization, initiated at the end 2012. The PMU 2020 strategic plan should allow the company to accelerate this transformation to ensure the future of equestrian activity and enable new growth such as international development and new gambling activities This plan is in its deployment phase, including the implementation of testing new outlets concepts. Tests are to be run in 30 cities in 2014 to validate the priority concepts and launch a broad deployment from early 2015. This ambitious strategy, aimed at diversifying and segmenting sales networks based on customer expectations, differentiated marketing offers and customer relations, will be fully modernized with high technological content.

by Thomas H. Hicks, for

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