Française des Jeux pandemic survival plan: cut €80m in costs


francaise-des-jeux-lottery-betting-pandemic-planFrench lottery and sports betting operator Française des Jeux (FDJ) is looking to slash its costs as the COVID-19 pandemic plays havoc with its revenue.

On Tuesday, FDJ announced that stakes over the first three months of 2020 totaled €4.1b, down 5.4% from the same period last year. Revenue fell only 0.9% to €516m, thanks mainly to the return to players dipping by nearly one point to 67.5%.

Lotteries remain FDJ’s bread-and-butter but sales fell 1.5% to €3.33b despite ‘strong momentum’ in its online lottery division. Sports betting took a much bigger hit, falling 18.1% to €766.5m, thanks to “the gradual drying up” of sports events that began in early March as the full impact of the COVID-19 pandemic was felt.

Until that point, FDJ said its activity was “in line with annual targets” thanks to betting activity rising 5% year-on-year. But the month following France’s imposition of pandemic ‘containment’ rules on March 12 has seen a €100m decline in turnover and €50m in lost earnings.

Overall turnover is down 60%, with most lottery sales down 40%. The fast-action Amigo lottery game, the results of which are broadcast on TV screens in bars and cafés, has been suspended entirely for obvious reasons. Sports betting is off nearly 95% following the suspension of most league play.

FDJ says it has crafted “a savings plan to preserve the Group’s profitability” that includes reductions in all cost items. The plan aims to cut €80m in expenses – more than 10% of annual fixed costs – through the rest of the year.

FDJ says it has more than €800m in available cash and will likely burn through €10m per month through June assuming a “gradual recovery” of the gambling market starting in mid-May. As such, FDJ declined to participate in the government’s pandemic bailout programs.

FDJ also said it intends to stick with the plan of paying a dividend on June 30 but will propose a 30% reduction of this dividend to €0.45 per share.