Ladbrokes owner GVC on track for higher earnings but shop closures will go ahead
Ladbrokes owner GVC Holdings has said online growth means the gambling firm’s earnings for 2019 will be higher than previously forecast but held firm on plans to shut 900 stores over the next two years.
The gambling giant, which also owns Coral, 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% 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 £670 million and £680 million, up from previous estimates of between £650 and £670 million.
Total net gaming revenue for the group was down 1% in the third quarter to September 30, while net gaming revenue for the year so far is up 3% against the previous period.
This growth has largely been driven by a surge in online revenues, up 12% for the past three months, which have been buoyed by a 16% rise in online sport betting revenues.
The company’s UK high street stores posted an 18% like-for-like decline in revenues for the quarter, driven by the changes to FOBT rules, but these remain ahead of expectations.
GVC also posted a 4% decline in net gaming revenues at its European retail sites, as it was behind 2018’s performance which had been boosted by the men’s football World Cup.
It also told investors that it completed a refinancing of 1.1 billion euros (£1 billion) 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.
“Online momentum remains strong across all major territories, with net gaming revenue up 12% in the quarter despite the prior period containing part of the World Cup.
“This performance continues to be driven by our industry-leading technology, products, brands, marketing capability, and people.”