Solid Q4 sees GVC’s full-year revenues rise 9%
City reiterates buy recommendation as operator shrugs off punter-friendly results and refinances debt
GVC Holdings expects to post full-year revenues ahead of expectations after the firm said its diversified business structure had helped it overcome a run of punter-friendly results in Q4.
In a trading update this morning, GVC revealed pro forma Q4 net revenues were up 7% to €231.3m, or 9% in constant currency, despite rivals having bemoaned sports results during the same trading period.
GVC said the international diversity of its business, along with its gaming brands, had “helped cushion us against particularly punter-friendly sports results in the UK” along with some adverse FX movements.
All of which meant the firm expected full-year revenues would come in ahead of earlier guidance at circa €894m, which would equate to an increase of 9% on 2015.
GVC also revealed NGR for January 2017 was up 21% on the previous year, with today’s update coming on the one-year anniversary of its acquisition of bwin.party.
“2016 was a landmark year for GVC in which the Group undertook its largest and most ambitious acquisition to date, that of bwin.party,” Kenny Alexander, GVC chief executive said.
“Through the tremendous hard work of our people, we achieved and exceeded many of our goals and once again we were able to create significant shareholder value.
“In addition to returning bwin.party to growth, we remain on target to secure €125m of synergies by the end of the current year.
“Our strategy of pursuing international diversification and scale, through the leverage of our proprietary technology and talented people, is more relevant today than ever.
“We are excited about the organic opportunities for the Group in 2017 and beyond, but also remain alive to further industry consolidation.”
GVC said it had also repaid the outstanding €386m loan provided by Cerebus Business Finance through a combination of existing cash resources and the drawdown of a€250m loan from Nomura International.
The refinancing is expected to result in interest payments savings of circa €40m in 2017.
Richard Stuber, analyst at Numis, today upgraded his GVC recommendation to buy.
“GVC has no retail exposure and today’s encouraging update reaffirms our preference for gambling stocks which have online exposure, strong momentum and importantly wide geographical diversification,” Stuber said.
GVC Holding’s share price was up 4% to 641.50p at the time of writing.