Rank Group PLC (LSE:RNK), the owner of Mecca Bingo and Grosvenor casinos, saw its first-half profits shrink because of inflation, but City analysts believe this highlights the scale of potential recovery for the company in the coming years.
Holding its AGM on 19 October, the gambling company is expected to provide a trading update alongside the meeting, but analysts at Peel Hunt believe the performance would be based on “a seasonably low point for trading” and will therefore be unable to provide much in the way of full-year guidance.
Peel Hunt expects full-year underlying profits to reach £44 million for the 2024 financial year, improving on £20.3 million in 2023 and will be looking out for any updates about trading at the Grosvenor casino division.
When Rank provided full-year results it revealed the weekly average sales at its Grosvenor brands were up at £6.5 million compared to £5.9 million in the year prior.
Operating in 52 venues including several sites in the capital as well as casinos in Manchester and Nottingham, the Grosvenor estate has received continued investment from its management, something Peel Hunt believes is “paying off in the form of recovering attendance outside London”.
“[2024] got off to a promising start and, with cost inflation abating, there is scope for positive operating leverage to show through, even before the upside from regulatory change starts to kick in in 2025,” the London broker added.
Shares in Rank are up 2.5% on Friday, having opened at 77p.