GVC shares jump following better than expected earnings
GVC Holdings said it had raised its full-year core earnings forecast for the second time in three months, as betting shops proved resilient despite tighter regulation and online gambling rose.
The company said earnings have been bolstered by stronger-than-forecast revenues in UK high street retail stores despite the impact of new legislation for fixed-odds betting terminals (FOBTs).
Over-the-counter wagers in UK betting shops jumped 7 per cent in the third quarter in the aftermath of the crackdown on betting machines, the company said.
Nevertheless, the company said it still expects to close 900 of its shops over the next two years, in line with plans announced in July, after the maximum bet restriction for the gambling terminals was reduced from £100 to £2 in April.
The company said “strong online momentum” across all territories has helped to drive higher earnings across the group.
Earnings before tax and interest for 2019 are now expected to be between £670m and £680m, up from previous estimates of between £650m and £670m.
Total net gaming revenue for the group was down 1 per cent in the third quarter to September 30, while net gaming revenue for the year so far is up 3 per cent against the previous period.
This growth has largely been driven by a surge in online revenues, up 12 per cent for the past three months, which have been buoyed by a 16 per cent rise in online sport betting revenues.
GVC also posted a 4 per cent decline in net gaming revenues at its European retail sites, as it was behind 2018’s performance which had been boosted by the football World Cup.
It also told investors that it completed a refinancing of £1bn worth of debt last month.
GVC chief executive Kenneth Alexander said: “I am delighted that the group’s financial performance has allowed us to upgrade our full-year earnings before interest and tax expectations again.