- Online revenue growth wiped out
- Better retail outlook to provide some mitigating effect
- Government Gambling Review To reduce 2023 profit
Global sports betting company Entain (ENT) said a weaker global macro environment and weaker customer spend will wipe out online growth this year.
At the full-year results announcement on 3 March 2022, the company guided for online net gaming growth of mid-to-high single digits. Guidance has now been cut to flat, after seeing 12% growth last year.
The disappointing downgrade sent the shares down 9% to £10.36 on Thursday, which means they have lost a third over the last six months and are down over 50% from their peak in September 2021.
Chief executive Jette Nygaard-Andersen commented: ‘The macro-economic outlook is uncertain, however the underlying performance of our business remains strong.
‘With an increasingly recreational customer base and relatively resilient revenue, we remain confident that our customer focus, diversification and proven ability to grow both organically and through M&A will enable us to deliver further progress against our strategy.’
WORSE THAN ANTICIPATED DECLINE
Leisure analyst Gregg Johnson at Shore Capital said today’s update was slightly worse than expected although likely to be mitigated by an improving outlook in the retail estate.
Johnson said the group now expects digital net gaming revenue to be flat for the full year, versus our prior expectations of 7% growth.
‘We had highlighted in our preview last week that delays in the licensing process in the Netherlands and Brazil could reduce this to low-single-digit, with earnings before interest, taxes, depreciation, and amortisation £40 million lower at circa £980 million versus £1,020 million previously.’
Johnson anticipates further reducing his 2022 EBITDA forecast by £10 million to £20 million.
For 2023 Johnson has penciled in EBITDA of £1.1 billion, implying around 15% growth, but this is before the impact from the latest Gambling Review, which was recently leaked.
Despite being less onerous on gambling firms than once anticipated, the latest proposals are likely to hit 2023 profits, with Johnson expecting the watered-down measures to cost the Coral and Ladbrokes-owner at least £50 million.
