GVC online business offsets UK retail decline in 2019

GVC Holdings announced Thursday its results for the year ended 31 December 2019. The Group has delivered earnings ahead of its initial forecasts, allowing to scale back its betting shop closure plans.

The firm reported underlying earnings (EBITDA) of £678.3 million (USD 875.5M), up from £640.8 million in 2018, with underlying pre-tax profits up to £522.9M from £434.6M. Net gaming revenues (NGR), meanwhile, rose to £3.66 billion (USD 4.72 billion) from £2.98 billion in the prior year.

GVC said the EBITDA figure was £50 million ahead of consensus at the start of the year, adding that it had seen “very strong growth” in its online division with NGR for the segment up 13% year-on-year.

Online underlying EBITDA was 20% ahead after adjusting for the estimated impact of incremental taxes. The surge in online helped to offset a 12% decline in like-for-like retail NGR for the UK, which was partly attributed to the introduction of a £2 stake limit on the group’s fixed-odds betting terminals. Over the year, the company said that despite the revenue decline it had managed to gain market share in UK retail and now expected to close 450 of its betting shops, less than half of those originally planned.

GVC’s total dividend for the year also grew by 10% to 35.2p per share, in line with its policy of double digit dividend growth.

Looking ahead, the company said the rapid evolution of the gambling market and regulation was “creating opportunities as well as challenges”.

GVC CEO Kenneth Alexander commented: “Our first full year since the Ladbrokes Coral acquisition has been a good one, and the performance has continued to be underpinned by our unique and highly effective operating model. We have delivered very strong growth in our online business, including market share gains in all major territories, and good momentum in our European Retail business.”

“We are delighted with the progress that is being made on the Ladbrokes Coral integration, and in the US the launch of BetMGM on the GVC platform in New Jersey was an important milestone for our business there and enables us to remain on track to deliver on our ambitions in this exciting market,” Alexander continued. “Looking ahead, we are confident that GVC’s broad international footprint, proven track record of acquisition and strong organic growth will continue to present significant opportunities for further expansion.”

“We continue to target double digit online revenue growth in the medium term, which we expect to deliver through a combination of underlying market growth and continuing to gain share in key territories and [merger and acquisition] activity”, the company said, adding that it expected to expand internationally and enter new markets in the coming year.

Into 2020, GVC said trading in the year to date was “strong” with NGR up 5%, attributed to strong margins from its sports betting activity.