Gambling giant GVC sees profit sink as coronavirus shuts betting shops
Gambling giant GVC saw profit fall 14 per cent in the first half of 2020 as coronavirus forced its betting shops to remain closed through much of April and May.
The firm, which owns Coral and Ladbrokes, said that the reopening of its stores meant it was “well-placed” for the rest of the year.
Shares in the firm were more or less flat as markets opened this morning.
The figures
Underlying operating profit for the six months to the end of June dropped to £223.9m from £260.3m, GVC said.
Net gaming revenue also slipped 11 per cent, from £1.8bn last year to £1.6bn this year.
However, the firm said that online gaming revenue had jumped 19 per cent in total as more punters logged on in lockdown.
On the other hand, revenue from Coral and Ladbrokes stores fell 50 per cent after betting shops were forced to close for much of the second quarter.
Due to cost management, GVC said that net debt stood at roughly the same level as at the beginning of the year, at £2.2bn.
The firm said it would not pay an interim dividend, and make future payouts in light of future results.
Why it’s interesting
The results come at the end of a tricky period for GVC over the past month or so, with its long term chief executive stepping down in July.
Kenny Alexander resigned after 13 years at the head of the firm, during which time he turned it into one of the world’s largest gambling companies.
In addition, HMRC has expanded its investigation into Ladbrokes owner GVC’s former online business in Turkey.
The probe by the tax authority began in late 2019 and was initially directed at former third-party suppliers over processing of payments at the business GVC disposed of in December 2017.
However, despite the difficulties, Richard Hunter at Interactive Investor said that the direction of travel for the firm was “clear”.
“Over the last year the shares have risen by 41 per cent, as compared to a decline of 13 per cent for the wider FTSE 100, to which the company earned promotion in June.
“The shares have also seen an increase of over 140% since their March low, showing renewed confidence in the company’s ability to adapt and survive”, he added.
What GVC said
Chief executive Shay Segev said: “Given the unprecedented trading environment, GVC has delivered an encouraging performance in the first half, underlining the strength of our diversified business model and the expertise, adaptability and dedication of our people.
“Our industry-leading technology will enable us to grow responsibly and sustainably, using our data-driven customer insights to ensure all of our customers have an enjoyable and safe experience while gaming with us.”