GVC Holdings has predicted that EBITDA could fall by £50 million (US$62 million) per month going forward as a result of the Covid-19 pandemic. The figure is half the initial £100 million GVC predicted in March.
GVC estimates the average monthly cash outflow will be limited to approximately £15 million per month, while other cost reduction actions will allow the company to break even. Strong numbers at the beginning of the year helped as net gaming revenue grew by 1 percent and increased by 16 percent online compared to 2019.
Still, the closing of retail outlets and sports cancellation reduced revenue from mid-March, according to SBC News.
“As our Q1 trading numbers once again demonstrate, GVC is a business that, in normal times, delivers an outstanding performance,” said CEO Kenneth Alexander. “However, 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 and our industry.”
To offset losses from retail closures, GVC has identified a number of opportunities to reduce costs in the U.K. The company can qualify for the government grant towards employment costs to support staff members which have been furloughed. In addition, the gambling group can access the business rates relief. The combination of the two may reduce costs by nearly £20 million per month.
In Italy and Belgium, GVC operates a franchising model where the store costs such as rent, employment, and utilities are paid by the franchisee. Other measures taken include reductions in online sports marketing, sports content and trading costs.
“We are also sensitive to the fact that at this time of economic stress and isolation, it is vital that we ensure a safe, responsible and enjoyable gaming environment for our customers and do everything that we can to minimize the potential for harm,” Alexander said.
