Paf issues tax warning on profitability despite record 2023

In what was another financially positive year for Paf, revenue was 6.9% higher year-on-year. The operator also had a 23.0% rise in net profit to €55.1m, another new annual record.

However, while CEO Christer Fahlstedt welcomed the news and praised Paf’s performance, he also warned over future profit prospects. In particular, Fahlstedt picked up on how rising gaming taxes in various markets will likely hit net profit levels in years to come.

In Finland, a temporary reduction on lottery tax has ended, with rates now rising from 5% to 12%. Meanwhile, Swedish gambling tax is increasing from 18% to 22%, Estonia 5% to 6% and Latvia from 10% to 12%.

“We can be happy and proud with the past year,” Fahlstedt said. “We have gained a larger customer base, and the number of active customers has increased by 27%, which explains some of it. 

“However, we are also well aware that the temporarily low gaming taxes in Finland have helped the result. The trend of increasing gaming taxes will continue.”

Fahlstedt also references the impact of what he describes as “much needed” demands for increased responsible gaming measures. Incidentally, Paf this month took the decision to further reduce loss limits for players aged between 20 and 24 to €8,000. This follows Paf overhauling its mandatory online loss limit in April 2023 lowering it from €20,000 to €17,500.

“Changes will result in reduced profitability and many operators will find it more difficult,” Fahlstedt said. “But Paf is well prepared for the times ahead.”

Online growth drives revenue up at Paf

Analysing revenue performance in 2023, it is clear to see where growth is coming from at Paf. Revenue from its online business climbed 8.2% to €153.8m, with Paf noting strong growth across Sweden, Spain and Latvia.

The latter was helped by its acquisition of Latvia-facing William Hill Latvia SIA and SIA Mr Green in June 2023. These deals, Paf says, generated an additional €5.1m in online revenue.

Paf also reported a 27.3% increase in registered online customers to a record 615,557. On this, the operator expects this total to continue to grow in 2024 with support from ongoing marketing efforts.

As for Paf’s other business, revenue from the land-based and ship segment slipped 0.9% to €23.3m. This was despite a 4.0% increase in the overall number of ship passengers in 2023.

Here, Paf agreed new deals with Tallink Group and Eckerö Linjen and welcomed Finnline’s new ship, M/S Finnsirius. Paf also launched its first land-based GameRoom in collaboration with Pikseli in Helsinki. The GameRoom concept offers a mix of amusement games and entertainment

Paf also noted an increase in cashless payments, with all amusement games and nearly half money slot machines now offering cashless options. This, Paf says, meets customer demand for smoother payment options.

“Through these actions and innovations, we look forward to continued growth and improvement of our service and offerings,” Paf said.

Net profit rises on revenue growth

Turning to costs, materials and services expenses edged up 7.9% to €42.6m. Staff costs were level at €24.2m while depreciation and impairment was only marginally higher at €10.6m.

Other operating expenses were reduced by 2.0% to €52.9m while Paf was slightly boosted by €723,605 in net financial income. 

As such, it was left with a pre-tax profit of €60.0m, up by 27.9% year-on-year. After paying €5.2m in tax and accounting for the impact of €305,468 in deferred taxes, net profit for 2023 increased 23.0% to €55.1m.

Paf also noted that higher revenue and profit allowed it to distribute €31.4m in funds during 2023. These funds are used for the benefit of society including third sector organisations that work to promote society in social activities, culture, youth work, sports, environmental activities and more.

“It’s undeniably great that Paf is achieving a great result, allowing us to distribute a total of €31.4m,” chairman Jan-Mikael von Schantz said. “The employees have done a phenomenal job over the past year, and the board would like to thank all Paf employees who have made this possible.”

Leave a Reply

Your email address will not be published. Required fields are marked *