Scratch card giant posts loss

Scratch card giant posts loss Scratch card giant posts loss

LONDON – Scientific Games Corporation, one of the biggest producers of lottery scratch cards in the world has reported a loss for the end of last year. Scientific Games produce all of the instant lottery scratch cards in the UK.

The loss, which has surprised many experts is mostly due to a sharp fall in instant games and service revenue. Revenue from scratch card sales fell by 11.4 per cent and service income fell by around 8 per cent.

Scientific Games CFO said, “Two significant factors that impacted our sales in the quarter – the change in reporting of the production for instant tickets in China and the re-pricing of our contract in Pennsylvania – will cease to negatively impact our results in 2010.”

Scientific Games reported an operating loss of $69.5 million for the final quarter of 2009, compared to an operating loss of $82.2 million in the final three months of the previous year. The smaller loss was due to $6.7 million of cost reductions from the previously announced Profitability Improvement Program. The scratch card producer had managed to make cost savings of nearly $24million for the whole year 2009 from this program, in fact surpassing the goal of between $15 and $20 million  of savings.

On another positive note for Scientific Games Corporation, increases in revenue related to the start-up of two instant ticket lotteries, higher sales from licensed properties and increased systems revenue in China contributed favourably to off setting some of the declines in other revenue sources.

Scientific Games expanded its retail customer base to over 150,000 in China at the end of 2009. The China Sports Lottery achieved quarterly retail sales growth of 32% compared to the previous year. Although management remains cautious due to the current difficult economic climate, the company has seen signs of improvement in revenues from the core parts of its business.

Share prices in Scientific Games were down 93 cents on Monday morning to $15.96. They had previously slumped to a low of $15.13 per share, down nearly 10 per cent.

Published: March 3, 2010

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