Ladbrokes owner said it had managed to reduce the figure to USD 61.4 million

GVC halves estimate for coronavirus impact on profits

GVC Holdings, which owns bookmakers' Ladbrokes and bwin has seen net gaming revenue (NGR) fall by almost a fifth in the UK.
2020-04-06
Reading time 1:28 min
Despite the cancellation of sports events and closure of retail outlets “significantly” reduced its revenue from mid-March, its net gaming revenue inched 1% higher, with online growing 19%. Shares of the London-listed firm, which have fallen more than 40% so far this year, were up as much as 8.8% after the update.

GVC Holdings halved its estimate on Monday for a monthly hit to profits from the coronavirus-driven shutdown in international sports, sending shares in the company nearly 9% higher.

GVC on Monday reported trading for this year's Q1 and provided a further update on the impact of COVID-19 and the mitigating actions being taken. The UK-based company, which previously estimated it would lose 100 million pounds monthly in core profit (EBITDA), said it had managed to reduce that figure to 50 million pounds ($61.4 million), and still hoped to find more savings.

The gambling industry, on the one hand, is seeing a bump in online gaming by people stuck at home under lockdowns, but has seen sports betting hit by a shutdown in sports activity that may last months. GVC said that the cancellation of sports events and closure of retail outlets had “significantly” reduced its revenue from mid-March. However, in the first quarter of 2020, its net gaming revenue inched 1% higher, with online growing 19%. Shares of the London-listed firm, which have fallen more than 40% so far this year, were up as much as 8.8%.

“While our global and product diversification is standing us in good stead during the current uncertainty, the COVID-19 pandemic is posing an unprecedented challenge to our business,” Chief Executive Officer Kenneth Alexander said, as reported by Reuters.

The company, like dozens of other European listed companies in the past month, also said it was withdrawing its interim dividend to conserve cash. With accessible cash of over 350 million pounds at the end of last month, GVC said after implementing cost cuts and capital reductions, its average cash outflow would be 15 million pounds per month.

“Overall, the trading update reinforces our confidence that GVC has the liquidity to comfortably operate through the current suspension of sports and is well placed to benefit when the industry returns to normality,” analysts at Berenberg said.

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