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GVC boss abruptly retires but update shows resilience of online gambling

Underlying profit for the first half is expected to be in the range of £340-350mln, versus the £323mln last year

GVC Holdings -

GVC Holdings PLC (LON:GVC) boss Kenny Alexander has announced his retirement after a 13-year stint where he led the gambling group from an AIM tiddler all the way to the FTSE 100. 

The Ladbrokes owner also provided a trading update showing group net gaming revenue down 22% in the second quarter to June 30.

READ: GVC surges as it halves expected earnings hit from coronavirus

Betting shops, which were closed for much of the period because of the coronavirus lockdown, saw revenue tumble 86% year on year.

Online revenues were up 22%, as online gaming surged 45% and the online sportsbook shrank 6% as many major sports were also shut down during the period.

But the return of sports to TV screens has seen activity close to pre-pandemic levels and online gaming continues to trade ahead of expectations as sports return, albeit below the peak levels seen during the quarter.

GVC, which said it is continuing to invest in the US through the group’s joint venture with casinos giant MGM, expects underlying profit (EBITDA) for the first half of the year to be in the range of £340-350mln, or around £300-310mln excluding IFRS-16, versus the £323mln in the same period last year and well ahead of most expectations.

Alexander will step down at CEO on Friday and be replaced by chief operating officer Shay Segev, who has been in the role for four years.

The change follows a long-term succession process, GVC said, with Segev already having been in charge of the group’s technology platform, its US joint venture with MGM Resorts, group acquisition and corporate development activity, its retail business, as well as the product, trading and customer service teams. 

It was also highlighted that he was a key figure in the successful integrations of the bwin and Ladbrokes Coral acquisitions.

“I have spent the last four months working from home and reflecting on my future plans, and this feels like the right moment,” said Alexander.

“Whilst it is never easy to hand the baton on, it has been very clear for a number of years now that Shay is the right person to succeed me.”

The shares fell 5% to 866p on Thursday morning.

Analysts at broker Shore Capital said Alexander's retirement was "big news" but "should not distract from what is a pretty stellar update for the six months to June, a period which covers the cancellation of most sporting fixtures and the closure of the majority of its retail outlets". 

At Peel Hunt they said: "Alexander is leaving but the remaining top team is well placed to continue GVCs’ excellent execution of its business plan. Perhaps his departure signals that swashbuckling M&A is less likely, but, with the US market opportunity continuing to expand, GVC can still achieve positive transformational change."

Hargreaves Lansdown called the performance resilient but sais "a significant change at the helm at what is a turbulent time, with intense regulatory scrutiny and coronavirus implications sizeable, comes with risk".

   --Adds share price and broker comment--

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Price: 1956 GBX

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