(Adds shares, detail on Q1 trading, analyst comment,
background)
April 6 (Reuters) - Ladbrokes and bwin owner GVC
halved its estimate on Monday for a monthly hit to profits from
the coronavirus-driven shutdown in international sports, sending
shares in the company nearly 9% higher.
GVC, which previously estimated it would lose 100 million
pounds monthly in core profit (EBITDA), said it had managed to
reduce that figure to 50 million pounds ($61.4 million), and
still hoped to find more savings.
The gambling industry on the one hand is seeing a bump in
online gaming by people stuck at home under lockdowns, but has
seen its big cash cow - sportsbetting - hammered by a shutdown
in sports activity that may last months.
GVC said that the cancellation of sports events and closure
of retail outlets had "significantly" reduced its revenue from
mid-March. However, in the first quarter of 2020, its net gaming
revenue inched 1% higher, with online growing 19%.
Shares of the London-listed firm, which have fallen more
than 40% so far this year, were up as much as 8.8%.
"While our global and product diversification is standing us
in good stead during the current uncertainty, the COVID-19
pandemic is posing an unprecedented challenge to our business,"
Chief Executive Officer Kenneth Alexander said.
The company, like dozens of other European listed companies
in the past month, also said it was withdrawing its interim
dividend to conserve cash.
With accessible cash of over 350 million pounds at the end
of last month, GVC said after implementing cost cuts and capital
reductions, its average cash outflow would be 15 million pounds
per month.
"Overall, the trading update reinforces our confidence that
GVC has the liquidity to comfortably operate through the current
suspension of sports and is well placed to benefit when the
industry returns to normality," analysts at Berenberg said.
($1 = 0.8151 pounds)
(Reporting by Yadarisa Shabong in Bengaluru, Editing by Sherry
Jacob-Phillips and Patrick Graham)
