La Française des Jeux (FDJ) has reported a notable uptick in their financial performance for the year 2023, characterized by a “solid” 6.5% year-on-year increase in revenue—owing largely to the vigorous expansion of its sports betting and online gaming operations. Fueled by an 18.8% lift in net gaming revenue (NGR), online gaming now represents close to a striking 13% of the group’s total NGR.
These promising figures are set against the backdrop of an ambitious bid in January when FDJ tabled a staggering SEK27.96 billion to acquire the full outstanding share capital of the Kindred Group. The move aimed to bolster FDJ’s reach and standing in the European gaming market.
In a year that saw FDJ’s engagement and growth strategies bear fruit, the firm’s net profit enjoyed a considerable 38% leap to €425 million, up from €307.9 million the year prior. Correspondingly, FDJ’s recurring operating income vaulted from €459 million to €532 million, marking a 15.8% increase.
However, tempered by the yardstick of the past, the 6.5% bump in revenue did not quite match the 9.1% increase to $2.46 billion reported the previous year, which was significantly driven by an 11% expansion in the lottery sector. In contrast, lottery only grew by 4.9% in 2023.
FDJ’s EBITDA rose by 11.3% to €657 million, paired with a robust margin of 25.1%. The pronounced surge in net profit is attributed to this outstanding level of recurring EBITDA combined with a sizable rise in financial profit. Stakeholders also witnessed a “strong” dividend growth, escalating by 30% to €1.78 per share, alongside an 80% payout ratio, bolstering FDJ’s financial robustness, with an impressive available cash reserve of €855 million.
Stéphane Pallez, the chair and CEO of FDJ, highlighted the accomplishments of the past year, emphasizing key strategic mergers and acquisitions. “FDJ delivered solid growth and results this year,” Pallez remarked, spotlighting the assimilation of Premier Lotteries Ireland and ZEturf as major milestones. She also stressed the potential of the Kindred acquisition which was envisioned to forge a dominant European entity, expected to generate substantial value for all stakeholders whilst maintaining the firm’s ethos of melding performance with responsibility.
An underlying theme in FDJ’s report was sustainable and responsible growth. The company outlined a three-pronged strategy to champion this cause. The strategy includes promoting recreational gaming, demonstrated by the fact that less than 2% of its online lottery gross gaming revenue is derived from high-risk players, and allocating more than 10% of its advertising budget specifically for responsible gambling campaigns.
Additionally, FDJ sought to uphold its societal commitments. This includes aspiring to retain high extra-financial ratings, exemplified by a score of 72/100 from Moody’s ESG Solutions for financial sustainability. Moreover, FDJ has emerged as a sizable contributor to public finances, adding €4.3 billion to the public coffers, while also generating 56,000 jobs, with 21,800 rooted in local retail trade.
Reflecting on FDJ’s acquisition activities, the incorporation of Kindred into FDJ’s portfolio was hailed as a step that would transform the company into Europe’s second-largest gaming operator and a “European gaming champion” — with an anticipated boost in revenue and profit growth.
Both Kindred and FDJ boards have shown support for the acquisition, which forms part of FDJ’s larger acquisition strategy. The French lottery and gaming titan finalized the purchase of both ZEturf and Premier Lotteries Ireland, with the assimilation of these entities meeting expectations.
Looking forward to the fiscal year 2024, FDJ has set its sights on an 8% revenue growth across the board, with a projected recurring EBITDA margin of approximately 24.5%. The group expects a 5% revenue growth curve in its markets, particularly in lottery and sports betting, riding the wave of high-profile sporting events such as the Paris Olympics and the European Championships. The company is also banking on ancillary growth stemming from its international endeavors, payment solutions, and service offerings.
The Kindred deal not only bolsters FDJ’s current strategic positioning but also paves the way for future growth horizons. In an engagement with iGB, Ed Birkin, a senior analyst at H2 Gambling Capital, referred to the acquisition as a “meaningful step-change” in FDJ’s trajectory towards evolving into a “multi-product top-tier European operator”.
