Evoke sinks as William Hill owner’s losses triple on restructuring costs
Evoke shares fell 17.3 per cent to 59.05p on Wednesday, as the William Hill owner reported a full year loss of £191.4m.
The figure was almost triple the loss reported for 2023, amid rising restructuring and financial costs.
Despite three per cent revenue growth to £1.75bn and adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) rising four per cent, exceptional items like costs linked to the exit from the US business-to-customer market drove the group deeper into the red.
The gambling group warned that first-quarter revenue growth will be in the low single digits, falling short of its five to nine per cent full-year target.
It cited new responsible gambling measures and weaker promotional effectiveness for this dip.
However, cost-cutting efforts are set to drive a £18-28m increase in adjusted EBITDA for the first financial quarter.
Evoke, which has been undergoing a pivotal turnaround strategy, announced up to £25m in additional cost savings for this year to help offset rising regulatory costs from employer national insurance and national living wage hikes.
Chief executive Per Wilderström described 2024 as a “pivotal year”, citing progress in stabilising revenue growth, despite challenges ahead.
“We needed to develop new ways of working to drive operational excellence, and our plans had to be executed by a refreshed and highly committed leadership team”, he said.
“We are under no illusions: this is a complete reset of this business.”
Despite the stock slump, analysts at Peel Hunt noted that while first quarter revenue was weaker than expected, “EBITDA continues to make progress… comfortably on track of our FY25 forecast of £359m”.
Jefferies analysts maintained a ‘Buy’ rating on the stock despite the loss, citing long-term upside potential as leverage declines. They maintained a price target of 140p.