GVC outperforms expectations thanks to online gains in 2018

GVC Holdings shares were up this morning after the Ladbrokes operator said it outperformed expectations in 2018.

The group, which also operates the Coral, Bwin, PartyGaming and Sportingbet brands, said in its post-close trading update that it expects 2018 revenue to grow 9% year-on-year, driven by a strong online performance and an increased contribution from its European retail business. 

Total online net gaming revenue for the year was up 19%, or 21% on a constant currency basis. Revenue was up across all key verticals, with revenue across GVC's sports brands up 20% from 2017, and gaming brands reporting a 16% increase from the prior year. The operator's B2B business also performed strongly, up 17% year-on-year. 

The European retail business also enjoyed a strong year, with NGR up 16%, helping offset a 3% decline in like-for-like UK retail. 

As a result of this strong performance, the operator says that it now expects underlying earnings before interest, tax, depreciation and amortisation to come in between £750m and £755m when it publishes its preliminary full-year results on March 5. That would be up to 2.2% ahead of current market consensus of £739m

GVC's 2018 results were aided by a strong finish to 2018, with fourth quarter revenue up 5% year-on-year, or 6% on a constant currency basis. 

This was down to the online divison, which saw revenue grow 15%, with the operator's gaming brands the standout performer. Gaming NGR was up 18% year-on-year, with partypoker revenue jumping 43%, revenue for the Gala brands growing 18%, and GVC's legacy casino brands up 13%.

The online sports brands reported a 14% increase in revenue for Q4, though an 18% increase in amounts wagered was partially offset by a gross win margin of 10.7%, 1.5 percentage points behind Q4 2017. 

The UK retail business struggled over the quarter, with revenue down 3% from the prior year. This was due to a 10% decline in like-for-like over-the-counter revenue, with gaming machine revenue up 3%. The European retail business also reported a decline in revenue for Q4, falling 7%, despite growth in Belgian and Irish revenue, up 15% and 8% respectively. These gains were wiped out by a lower over-the-counter gross win margin in the Italian Eurobet business, however. 

“The Group's performance in 2018 has been excellent with the strong momentum reported at Q3 continuing into Q4,” said GVC chief executive Kenneth Alexander.

“We are materially outperforming the market and taking share in all of our major territories. As the group carries this momentum forward into the new year, and starts to deliver the opportunities provided by both the Ladbrokes Coral integration and our sports-betting joint-venture in the US with MGM Resorts, the board is confident that the group is very well placed for a successful 2019.”

The operator’s share price trading up 2.08% to 687.0p per share in London this morning.