GVC Holdings first half profits rise, identifies more cost savings
GVC Holdings posted a jump in half-year pre-tax profit on Thursday as revenue rose amid strong momentum in the online and European retail segments and thanks to a boost from the World Cup, as it identified further cost savings from its Ladbrokes Coral acquisition.
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In the six months to 30 June, underlying pre-tax profit increased to £162.1m from £64.4m, with revenue up 8% on a pro-forma basis to £1.1bn and net gaming revenue also up 8% at £1.13bn, driven by Online and European Retail. During the period, the World Cup contributed £35.2m of net gaming revenue pre-substitution, with 65% of the marketing spend falling in the first half.
During the half, online net gaming revenue was up 20% at constant currency, online sports revenue was 21% higher and games revenue was up 15%.
GVC said the benefits of synergies from the Ladbrokes Coral merger and to a lesser extent the remaining synergies from the bwin.party acquisition, helped underlying earnings before interest, taxes, depreciation and amortisation to rise 11% to £349.5m.
The group lifted its dividend by 10% to 16p a share and said the positive performance in the first half means it is now confident of delivering a full-year result in-line with the board's expectations.
The company also said it has now identified capex synergies of at least £30m from the Ladbrokes Coral deal in addition to the £130m cost synergies it had already identified and said it is well placed to deliver those savings while driving top line growth.
As far as current trading is concerned, GVC said pro-forma net gaming revenue was up 14% for the first two months of the third quarter.
Chief executive officer Kenneth Alexander said: "The performance of the GVC Group in the first half has been extremely pleasing in what has been a very busy period. Strong momentum in Online and European Retail has continued, and a positive World Cup helped improve trends in UK Retail in the second quarter.
"The acquisition of Ladbrokes Coral completed on 28 March and the integration of that business is progressing well."
At 0810 BST, the shares were up 0.5% to 1,067p.