GVC’s Profits Skyrocket in Wake of Bwin Acquisition
Posted on: September 21, 2016, 02:15h.
Last updated on: September 21, 2016, 02:11h.
GVC this week reported record profits and that its Bwin assets, acquired at the beginning of the year, had already produced returns that were “far greater than expected.”
Revenues for the enlarged company grew 8 percent to €432 million ($482 million) in the first half of the year, while pre-tax profits rose 135 per cent to €51.3 million ($57 million).
Shares in the company rose more than 4 percent following the news, which was delivered in an earnings call on Tuesday by GVC CEO Kenneth Alexander. The company was admitted to the FTSE 250 earlier this month.
“We believe the organic growth potential of the group is now greater than originally anticipated at the time of the Bwin.party transaction acquisition,” said Alexander, who added that he expected full-year results to be at the “upper end” of expectations. The company has predicted it will achieve €125 million in cost savings by the end of next year, thanks to the Bwin takeover.
Party Returns to Growth
In September 2015, GVC won a protracted bidding war with 888 Holdings over the right to buy Bwin.party, for $1.6 billion, although the deal was only finalized in January of this year. The company also owns the Sportingbet and Foxy Bingo brands, among others.
GVC’S Mobile sports betting operations rose 55 percent year on year, and mobile gaming grew by 98 percent.
Mobile gaming revenue growth can be attributed in part to the return of the once-mighty PartyPoker brand.
Bwin.party’s pre-takeover poker operations had become a thorn in its side. In 2014 poker revenues across all markets dropped by 29 percent, year on year, which contributed to a net operating loss of €94.3 million ($105 million) across all operations.
One of GVC’s first moves on acquiring Party is to reenter 21 markets across Europe and the Americas, many of which it had abandoned in 2013 because they were legally gray.
“When we acquired BwinParty, we always knew we were getting some very strong brands, but I think we particularly underestimated how powerful the Bwin brand is in the German-speaking markets,” Alexander told Gambling Insider this week.
“Then of course we’ve got PartyPoker, PartyCasino, Foxy Bingo and obviously the legacy brands that GVC already had, principally Sportingbet. I think we’ve got some very powerful brands and we’re investing less in marketing than some of our peers.”
“It has been a period of considerable achievement for GVC,” said Canaccord Genuity analysts. “The acquisition of bwin.party has started well, with hard evidence of material revenue synergies coming through already, through more efficient marketing spend, improved VIP retention and a step up in the trading platform.”
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