UK-listed gambling operator GVC Holdings says its “mitigating actions” have reduced its monthly earnings hit from the COVID-19 pandemic to £50m.
On Monday, GVC issued a trading update saying it had started 2020 off on the right foot, with net gaming revenue in Q1 up 1% year-on-year, while online revenue was up 16%. But by mid-March things had gone squirrelly following the closure of its retail operations and the mass cancellation of sports and racing events due to pandemic mitigation measures.
GVC previously estimated the negative impact of COVID-19 on its earnings would be around £100m per month, but has now revised this estimate to £50m after taking what CEO Kenny Alexander called “a range of measures to keep our people safe, strengthen our financial position, limit cash outflow, preserve jobs and maintain a compelling customer offer.”
Last week, UK media reported that GVC’s Ladbrokes and Coral brands had notified their retail landlords of the company’s intention to withhold rent payments on around 3k betting shops. GVC subsequently issued a statement saying it had “taken the difficult decision to temporary place on hold rental payments” but “fully intends to make-up the shortfall once normal trading conditions resume.”
Like other UK land-based gambling operators, GVC was forced to shut its betting shops last month on the order of the UK government, which has launched programs to offer relief on business rates and ensure furloughed staff continue to receive paychecks while the pandemic rages.
GVC also announced that it had decided to withdraw payment of its second interim dividend, which would have resulted in a total cash cost of £103m if paid as planned on April 23. GVC said it recognizes the importance of periodically making it rain for shareholders and “will consider dividends with future results announcements.”
Investors took the news well, as GVC’s stock closed out Monday’s trading up 18.5% (although several UK rivals, including William Hill and 888 Holdings, also enjoyed double-digit gains on Monday).
In more positive news, GVC announced last week that its PartyPoker brand had obtained an Italian gaming license allowing it to offer online poker to Italian punters as of April 1. GVC acknowledged that Italy’s gambling marketing restrictions will present the brand – which hasn’t been active in Italy for four years – with challenges in getting the word out regarding its return, but nonetheless viewed Italy as “an exciting opportunity.”
In other GVC news, the company promoted its director of responsible gambling Grainne Hurst to the newly created role of group corporate affairs director. Hurst, whose remit includes developing relationships with the media and external partners while continuing to pursue responsible gambling initiatives, said she looked forward to helping GVC deliver “a successful, sustainable and socially responsible business.”