GVC announces 'excellent start' to the year but warns of unknown FOBTs impact

GVC Holdings chief executive Kenny Alexander praised an "excellent start to the year" for the company but warned it would take weeks before the FOBTs impact can be assessed.

The restrictions on FOBTs, which reduced maximum stakes on the machines from £100 to £2 from Monday, caused many high-street operators to predict a gloomy outlook in the months leading up to the change.

However, after positive first quarter results, Alexander says GVC is confident of delivering profit in-line with expectations for the year, although he stressed it would take some time for the company to assess the impact of the new changes to FOBTs.

He said: "This trading update reflects a continuation of the strong trends reported on March 5, 2019, and represents an excellent start to the year.

"We continue to see good volume growth across all major online brands and territories and we remain very confident of achieving our target of double-digit online net gaming revenue growth.

"The impact of soft gross win margins in Italy and the UK was offset by improved margins in other territories, demonstrating the benefit of both geographic and product diversification across the group.

"In UK retail and European retail, improved sports wagering growth helped offset softer sports gross win margins."

He continued: "New B2 machines stakes restrictions were implemented in the UK on April 1 and we expect it to be several weeks before we can start to assess the impact.

"At this early stage of the year, the board is confident of delivering Ebitda and operating profit in-line with expectations.”

In its first-quarter trading update, GVC announced online net gaming revenue growth of 17 per cent, continuing strong volume growth in all major territories.

European retail net gaming revenue increased by two per cent, with sports wagers 13 per cent ahead.

The total group net gaming revenue equated to growth of eight per cent for the quarter.

Gavin Kelleher from analysts Goodbody said: "Overall this is another solid update from GVC. The group continues to deliver impressive online growth rates, which is a key driver of the investment case and valuation.

"GVC’s share price was impacted by the recent CEO and Chairman share sales and is down 13 per cent on the year to date."

GVC shares closed up 0.86 per cent, at 588p.

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