OPAP Holding Société Anonyme (ALWN) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I am Galli, your Chorus Call operator. Welcome, and thank you for joining the OPAP S.A. Conference Call and Live Webcast question-and-answer session to discuss the first quarter 2022 financial results. Please note, a video presentation has been distributed and is also available on the OPAP Investor Relations website. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Jan Karas, CEO of OPAP S.A. Mr. Karas, you may now proceed.

Thank you very much. Good evening, and -- or Good morning to everyone, and welcome to our regular Q1 2022 results conference call. I'm delighted to share with you another set of solid results of OPAP, reflecting strong online contribution and encouraging retail performance despite some COVID-related restrictions and macro-environment affecting our Q1. Lift of the green pass since May 1 and face mask mandate as of today, we are expected to further aid bookings. Hopefully you have reviewed the results recorded video we shared with you earlier today. So we will jump directly to our Q&A session. Galli, over to you.

[Operator Instructions] The first question is from the line of Draziotis Stamatios with Eurobank Equities.

I have 3 things to ask, if I may, please. Firstly, just wondering whether you are happy with the guidance you had provided back in March and you still believe this profitability range is still feasible. Secondly, you mentioned in the presentation that VLT run rate has improved since the easing of restrictions. I'm just wondering about the other games. Have you noticed any sort of change in Punters behavior in the aftermath of the war in Ukraine and the mounting inflationary pressures? For example, has there been any impact on footfall, on spending, recycling active accounts since Q1 that is causing any concern? And lastly, just on the deal, you recently announced the sale of the minority interest in Betano. Could you confirm what you intend to do with the cash? And when do you expect the transaction to close, please?

Yes. So we will -- thank you for the question. We will answer all 3 of them. I will start with the first one, referring to our outlook. So we have explained the rationale for providing outlook this year last time when we presented. Given the quite challenging and volatile environment, we thought that we would be transparent and therefore we thought it will be helpful when we envisage the group performance obviously with certain assumptions that we presented. Now as of today, following strong Q1, we still think that our outlook is valid. So we confirm that outlook that we have presented to you in the previous quarterly call. Obviously we are not yet seeing any stabilization of geopolitical tension, neither any improvement on the inflationary front. So despite that, we are still optimistic and positive and confident maybe with the high-end of the range to be a bit challenging. In any case, we will come back with our updated view on this whole macro situation and its impact on our business, as we always do, at our next quarterly call after the summer. So you can -- rest assure that we will keep you updated on that front. The second question was related to performance. We see currently, again, connected with the previous topic, there is quite a few factors influencing the existing performance. So it's a bit difficult to read the specific factor here, namely the green pass measures you referred to and its impact because we need to have the big picture here. That is macro, that is inflation, those are certainly factors that are not helping the continuation of the work contract. On the other hand, we need to keep in mind many of the positive trends. You mentioned green pass. We already see some positive impact of it, think of single-digit or mid-single-digit impact. But very importantly, as I have mentioned just a second ago, the June 1, today, is the first day when the masks are not mandatory anymore. So if we keep in mind the very important customer perspective, the mask still played a role also in May, and that is something we are excited to see what impact it will have really through normal situation now in our stores going forward. So we remain optimistic about further positive impacts and evolution, also connected with the positive expectations of everyone from the, what is expected to be a very strong touristic season and its macro impact. On the third question, I will kindly ask Pavel to answer to you.

Good afternoon from me. We expect the transaction to close somewhere within Q3. It is still subject to regulatory approvals and also corporate separation of the Betano business from the Greek and Cypriot business. So the expectation is Q3. And the proceeds will be used to finance the last part of Stoiximan earn-out during '22 and the remaining to be distributed.

And just a follow-up on the current running rate question. On the retail part of the business, I guess, from what you are saying, it makes sense to expect an improvement in terms of run rates in the retail business vis-a-vis 2019 levels, right? So Q4 was down 13%, if I remember correctly, versus normal, let's call it, Q1 was down 10%. Is it a fair assumption to make that these trends ought to improve as these COVID-related measures get relaxed and probably more than offset the macroeconomic impact?

Yes, your thinking is correct, and we have expectations that are positive. Obviously we all know in how difficult times macro-economy we live. So the reality remains to be seen. But if we don't face any unpleasant surprises, the trends that we expect are certainly in the positive direction.

Our next question is from the line of Memisoglu Osman with Ambrosia Capital.

Many thanks for your time and the presentation. Going back to -- so 2 on my side, one on VLT, one on online. Just following up on your presentation that the 4% comes across as a bit subdued, but maybe you expected to pick up with the masks being lifted from June 1. And also maybe you're seeing some impact from a macro angle. So you would have recovered more. I guess that's the first bit. And then the second one, you did have the retail opening, so I understand, I appreciate the online coming down. How do you see the rest of the quarters for online? Should we see a return back to growth in Q2? And related to this, how is your market share coming along? Obviously it's some new entrants are there. Any color on that front would be helpful. And finally, on online, any news, any update on when we should see benefits in the financials from your new product plans in the online segment?