Ladbrokes-owner GVC Holdings (GVC) raised guidance for full year earnings as it continues to draw the betting public. This is the second time in the last three months that the company has upped its earnings expectations.

The global sports and casino betting company now anticipates earnings before interest, tax, depreciation and amortisation (EBITDA) to be between £670m and £680m. That's up from the £650m to £670m range previously.

The news came alongside third quarter trading for the three months to 30 September, and inspired a 3% jump in the share price to a 2019 high of 773p, valuing the business at just shy of £4.5bn.

The company reported strong growth in online net gaming revenues , up 12% despite the tough comparatives which included the world cup last year. Year-to-date growth now stands at 15%.

Like-for-like trends in the Ladbroke’s retail estate were also seen ahead of expectations, down 18% impacted by the cut in maximum stakes for fixed odds betting to £2.

Chief executive Kenneth Alexander said, ‘online momentum remains strong across all major territories and this performance continues to be driven by our industry-leading technology, products, brands, marketing capability, and people.’

SMALLER BUT PROFITABLE

The company closed a further 41 shops during the quarter taking the total number to 198, and is on target to close a total of 900 sites over the next two years.

Analysts believes that the eventual smaller footprint will result in a sustainable and profitable retail business.

The company has highlighted the significant growth opportunity in the US and is well positioned given its joint venture with leading casino group MGM.

Management reported that it had made an encouraging start in the US with the launch of BetMGM mobile app in New Jersey.

The stakes have risen following last week’s merger between Paddy Power Betfair and the Stars group which created the world’s largest gambling company.

The group reported that it had refinanced its loans into one larger loan which will result in lower interest costs.

The raised guidance has prompted Shore Capital to upgrade their earnings per share forecasts for the full year by 2p to 64p, putting the shares on a PE of 12 times.

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Issue Date: 09 Oct 2019