GVC expects earnings to beat market consensus

Gambling company GVC expects full-year earnings will beat market consensus thanks to strong growth in its online business.

The bookmaker expects to post underlying earnings before interest, taxation, depreciation and amortisation, or Ebitda, between £750 million and £755 million – ahead of market consensus of £739 million.

The company, which completed its £4 billion acquisition of rival Ladbrokes Coral last March, said fourth quarter net gaming revenue was boosted by a 15% increase in sales from its online business compared to the same period a year earlier.

However, like-for-like sales for its UK retail business declined 3% in the fourth quarter. Retail sales for its European business also fell 7% in the final quarter, but rose 16% for the full-year.

Net gaming revenue from GVC sports brands such as Bwin and Ladbrokes rose 14%, while revenue for its gaming brands that includes Party Poker and Gala Bingo increased 18%.

Chief executive Kenneth Alexander said: “The group’s performance in 2018 has been excellent with the strong momentum reported at the third quarter continuing into the fourth quarter.

“We are materially outperforming the market and taking share in all of our major territories.”

GVC has turned its attention to taking advantage of deregulation in the US, which has allowed states to legalise sports betting. It signed a deal for a joint venture with American casino group MGM Resorts last July.

Mr Alexander said: “As the group carries this momentum forward into the new year, and starts to deliver the opportunities provided by both the Ladbrokes Coral integration and our sports-betting joint-venture in the US with MGM Resorts, the board is confident that the group is very well placed for a successful 2019.”

George Salmon, equity analyst at Hargreaves Lansdown, said the news that GVC will report earnings ahead of expectations comes not long after the group raised forecasts for cost saving around the Ladbrokes Coral merger, so there is “a lot to like about how the group is performing”.

He said: “Its excellent performance will only raise hopes GVC can repeat the trick in the recently opened up American market, although as ever with gambling, there’s no such thing as a guaranteed winner”.

However, Mr Salmon said that despite GVC’s strong performance and the potential in the US, “uncertainty around the UK market means investor sentiment remains reasonably cautious”.