Ladbrokes Coral owner posts strong results despite revenue hit from FOBT cut

GVC, owner of Ladbrokes Coral, has posted a strong trading performance despite the fall in machine revenue caused by the FOBT stake reduction.

The impact of the cut in FOBT stakes to a £2 maximum was evident, with the UK retail arm of the group reporting a 39 per cent fall in machine revenue and a revenue decline of 19 per cent on like-for-like growth, both of which were slightly better than previous guidance and helped by an eight per cent increase in over-the-counter betting.

The gambling group's good performance was driven by online, where revenue growth of 17 per cent in constant currency in the year to the end of June was driven by betting gains of 20 per cent. Online gaming proved particularly strong with a 16 per cent rise, while all major territories were in positive market share territory, with Britain up 19 per cent, Germany 24 per cent and Brazil and Australia 38 per cent.

European retail revenue was up 13 per cent, with double-digit growth in Italy, Belgium and Ireland. The group's positive results came despite strong comparatives to last year's football World Cup.

Kenny Alexander: GVC chief executive pleased with the performance after latest trading updateCredit: Kathleen Sarg

GVC chief executive Kenny Alexander said: "Trading in the second quarter remained very strong with the online division delivering continued material market share gains across all major territories.

"The transition to a post £2 stakes-cut environment in UK Retail is progressing very well and we believe the Ladbrokes Coral estate is best placed to take market share.

"In the US, Roar Digital, our joint-venture with MGM Resorts, is on track for its full online launch ahead of the NFL season in September. In the first half of the year the group was granted licences in Mississippi and Nevada, and Roar Digital received a transactional waiver to conduct business in New Jersey.

"The group expects an announcement in August from Hesse, the state leading the regulatory process for online sports betting in Germany, detailing the requirements that will govern the new sports betting licences. The strong trading performance of the Group means that any potential costs in 2019 associated with the new sports licences are expected to be fully mitigated.

"The board therefore remains confident of delivering EBITDA [earnings before interest, tax, depreciation and amortization] and operating profit in line with expectations for the full year."

GVC in numbers

19% drop in revenue (like-for-like)
17% rise in online revenue
38% online gaming's increased market share in Australia
900 shops expected to close over two-year period

The positive results come in a climate that saw rival bookmaking chain William Hill announce this month that they would shut 700 shops due to the FOBTs stake cut, affecting 4,500 jobs.

In the wake of the William Hill announcement, GVC said it now expects 900 of its betting shops could close over two years, ten per cent fewer than previous estimates.

Goodbody analyst Gavin Kelleher said: "Overall, we view this as another strong update from GVC. The group continues to deliver impressive online growth rates, which is a key driver of the investment case."

GVC's share closed on Wednesday at 602.6p, down 6.2p.

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