GVC Holdings reveals the extent of group revenue hit that COVID-19 could cause

GVC Holdings has shared an update on how the ongoing coronavirus pandemic could affect the company’s EBITDA this year.

In particular, the group pointed to the impact that sporting event cancellations might have.

A drop in revenue, but doomsday isn’t looming

In its official press release, GVC said that the Group could miss out on up to £150 million. This was based on a variety of assumptions, including the following.

• Euro 2020 is postponed, with all other football suspended until July 2020;
• Major horse racing events, such as Royal Ascot and Aintree are cancelled. Races that go ahead are played behind closed doors;
• Retail: “The UK retail estate in the UK will remain open for business. Our stores in Italy and Belgium are closed for three months.”

According to the release, 43% of the company’s net gaming revenue in 2019 came from sports.

When talking about the current situation in more depth, the company said the below.

“These assumptions would mean that there will be substantially fewer sporting events through to August 2020 and that EBITDA for the financial year ending 31 December 2020 will be reduced by approximately £130m – £150m before any mitigating actions.

“If shops in the UK are closed, we anticipate that this would incrementally reduce EBITDA by approximately £45m – £50m per month, which includes employment costs of approximately £20m per month.”

GVC CEO Kenneth Alexander also spoke about the challenges faced right now. He said that despite the difficult state of things, the Group is in a good place.

“While we do not underestimate the challenge presented by COVID-19, GVC is in a robust position to manage the impact on our operations.

“We are a diverse global business, with an experienced and expert management team, which operates across multiple products and markets. Our priority is to protect our employees while maintaining our offer to our customers at this difficult time.”

The Group mentioned that it’s “difficult to quantify the precise impact on earnings” for 2020.

Yesterday, Flutter Entertainment – owner of Paddy Power – also mentioned that COVID-19 could impact its annual earnings.

Strong finances 

GVC reported a prosperous 2019, generating £2.12 billion in online revenue. Of this, £966.5 million was sports betting – a 15.7% increase compared to 2018.

Notably, online gaming (i.e. casino, etc.) was even more important when it came to earnings. This brought in £1.19 billion last year, up by 12.6% on 2018’s figure.