Ladbrokes and bwin owner GVC has halved its estimate for a monthly hit to profits from the coronavirus-driven shutdown in international sports, sending shares in the company nearly 9% higher.
GVC, which previously estimated it would lose £100m a month in core profit (EBITDA), said it had managed to reduce that figure to £50m, and still hoped to find more savings.
The gambling industry on the one hand is seeing a bump in online gaming by people stuck at home under lockdowns, but has seen its big cash cow – sportsbetting – hammered by a shutdown in sports activity that may last months.
GVC said that the cancellation of sports events and closure of retail outlets had “significantly” reduced its revenue from mid-March.
However, in the first quarter of 2020, its net gaming revenue inched 1% higher, with online growing 19%.
Shares of the London-listed firm, which have fallen more than 40% so far this year, were up as much as 8.8% today.
“While our global and product diversification is standing us in good stead during the current uncertainty, the Covid-19 pandemic is posing an unprecedented challenge to our business,” chief executive Kenneth Alexander said.
The company, like dozens of other European listed companies in the past month, also said it was withdrawing its interim dividend to conserve cash.
With accessible cash of over £350m at the end of last month, GVC said after implementing cost cuts and capital reductions, its average cash outflow would be £15m a month.
Analysts said that overall, the trading update reinforces