- First half losses reduced
- Online revenues return to growth
- Interim dividend hiked by 5%
Among the FTSE 100’s worst performers this year, shares in sports betting and gaming giant Entain (ENT) rallied 8% to 564.2p after the Ladbrokes, Coral and Sportingbet owner upgraded guidance for the year to December 2024.
This followed a better-than-expected first half from the company, whose second quarter performance was boosted by a favourable win margin in the Euros football tournament, not to mention the revised timing of regulatory implementation in Brazil and the Netherlands.
OUTLOOK RAISED
Entain is now guiding to year-to-December 2024 EBITDA (earnings before interest, tax, depreciation and amortisation) in the £1.04 billion to £1.09 billion range, which compares with the company-compiled consensus of £1.045 billion.
The company, which also owns the Foxy Bingo and PartyCasino gaming brands and a 50% stake in US sports betting giant BetMGM, now expects to deliver low single-digit growth in full year online NGR (net gaming revenue), compared with earlier guidance for a slight dip.
Entain, which spurned takeover offers from MGM (MGM:NYSE) and Draftkings (DKNG:NASDAQ) in 2021, has seen its growth stall since the lockdown gaming boom faded, been forced to pay some huge fines and also grappled with rising competition.
Given the difficulties Entain has faced in recent years, results for the half to June were rather encouraging.
EBITDA rose 5% to £524 million, in line with market expectations with a boost from prior year acquisitions, while online revenues returned to growth in the second quarter, ahead of plan.
As previously disclosed, Entain’s 50% share in BetMGM contributed a post-tax loss of £57 million and with 2024 a year of investment, a similar loss is now expected in the second half.
Due to the ongoing challenging backdrop in certain markets, Entain remained loss-making at the pre-tax level.
However, the scale of the pre-tax deficit was significantly reduced and having enjoyed a healthy first half net cash inflow of £305.1 million, the indebted firm felt confident enough to hike the half-time payout by 5% to 9.3p.
HARD WORK BEARING FRUIT
Interim CEO and chair designate Stella David said Entain’s first half results were ‘clear evidence that our hard work improving the group’s operational performance is bearing fruit. Whilst there is more work to do, we are pleased with the progress so far and look forward to building further on these solid foundations in the second half and beyond.’
AJ Bell investment director Russ Mould said: ‘Ladbrokes and Coral owner Entain has been in a bit of a mess for some time, so investors will take succour from the company’s latest results.’
Narrowed losses and the improving outlook provide ‘some decent foundations for incoming CEO Gavin Isaacs’ efforts to revive Entain’s fortunes when he takes charge at the beginning of next month’, added Mould.
‘He won’t be able to duplicate the benefit the company enjoyed from Euro 2024 and there is still plenty on his to do list. This includes navigating a tricky regulatory backdrop which impacted the company’s performance in the UK in the first half of the year.
‘It also involves injecting some new life into its US joint venture BetMGM. The American market is seen as a major source of opportunity but, despite putting in material investment across the pond, the venture is struggling to make any progress on market share.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Steven Frazer) own shares in AJ Bell.
