GVC ignites action plan to halve monthly EBITDA damage
Operator kickstarts cost-saving strategy to save £50m per month as Q1 online revenue rises 16%
GVC has taken action to halve its monthly EBITDA losses after initial guidance suggested coronavirus would cost the operator £100m per month.
The London-listed firm is planning to reduce monthly EBITDA impact to £50m by using the UK government’s furlough scheme for retail colleagues, as well as applying for business rates relief.
Those measures will save £20m per month according to GVC, which also suggested its franchising model in Belgium and Italy will reduce the blow as operating costs in those countries reside with the franchisee.
Finally, the operator has pledged to cut back on online sports marketing, sports content and sports trading costs while global sport remains off.
Around 63% of the monthly EBITDA impact would be soaked up by GVC’s UK-facing Ladbrokes Coral retail business, while that figure drops to 20% for online and 17% for European retail.
In further cost-saving measures, the payment of 2019 bonuses for directors has been postponed while the board has also withdrawn the second interim dividend due for payment on 23 April.
GVC also announced its Q1 2020 results this morning as online net gaming revenue grew 16%, driven by 17% rises in both sports and gaming.
UK retail fell by 19%, as European retail remained flat following a 3% drop-off.
The closure of retail outlets and the cancellation of sports events significantly reduced revenue from 15 March, with the effects likely to be felt in Q2 2020.
GVC CEO Kenny Alexander thanked the operator’s worldwide employees for “rapidly adapting” to the challenges posed by the coronavirus pandemic.
GVC CEO Kenny Alexander
“As our Q1 trading numbers once again demonstrate, GVC is a business that, in normal times, delivers an outstanding performance,” said Alexander.
“However, 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 and our industry.
“We are responding decisively and have put in place a range of measures to keep our people safe, strengthen our financial position, limit cash outflow, preserve jobs and maintain a compelling customer offer.
“I am confident that we will emerge from this period in a position of strength, and we will be well placed to take advantage of a range of attractive growth opportunities which we believe will be available to us,” he added.