- Full year profit beats estimates
- 2025 profit raised to top of range
- On track to open 50 new sites
Low-cost gym operator GYM Group (GYM) delivered full year profit ahead of consensus and raised its 2025 guidance to the top end of the previously-upgraded range.
The shares, which had been weak coming into the report, falling by around a quarter to 130p, rose as much as 6% before settling down up to 136.8p, for a gain of 1.6%.
WHAT THE COMPANY SAID
Chief executive Will Orr commented: ‘We will continue to execute on initiatives started in FY24 alongside new initiatives in place for FY25, underpinned by our investment in technology and data to drive future growth.
‘As a result, we believe there is still more benefit to come from the Next Chapter growth plan, giving us the confidence to increase guidance again to the top end of the recently revised analyst forecast range for FY25.’
Trading has remained strong in the busy first two months of the year with revenue up 8% year-on-year, driven by a 4% increase in average members and 4% growth in yield.
Group adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) excluding normalised rent for 2025 is expected to be at the top end of the recently revised analyst forecast range of £49 million to £50.8 million.
PROFITABLE GROWTH
The cadence of new site openings is expected to increase to between 14 and 16 from an average of 12 in 2024, all funded from free cashflow.
‘With significant white space opportunity suggesting a decade of roll-out potential, we are accelerating our self-funded roll-out of circa 50 sites over three years that are expected to deliver an average 30% return on invested capital,’ the company said.
In addition, Gym Group is delivering on its goal to drive up returns on mature sites earlier than expected with average returns on invested capital rising to 25% from 21%.
Free cashflow increased to £37.5 million from £27 million, leading to a £5.1 million reduction in non-property net debt to £61.3 million.
UPGRADES
Greg Johnson at Shore Capital nudged-up his forecast for 2025 EBITDA less normalised rent to £50.8 million in line with management guidance. ‘Given the macro backdrop, albeit the trading backdrop remains solid, we see our numbers as cautiously set, especially around margin,’ added Johnson.
Peel Hunt increased its 2025 EBITDA forecast from £49.5 million to £51.2 million and noted revenue growth and cost management were exceeding expectations.
